Mexico - Livestock and Products Semi-Annual Report 2010
Mexico's consumption of beef and pork is expected to increase in 2010, according to Zaida San Juan and Daniel R. Williams II in the latest GAIN Report from USDA Foreign Agricultural Service.
20 March 2010
10 minute read
Report Highlights
Mexico’s beef production for 2010 is revised higher to reflect official forecast. With improving worldwide economic conditions, Mexican beef exports are revised upward; meanwhile, beef imports are revised slightly lower reflecting the lack of consumption recovery. In addition, domestic production is covering a larger share of the total beef distribution. Total 2009 pork production didn’t decline after H1N1 outbreaks in April and May 2009. Pork imports for 2010 and 2009 are revised 8.9 and 8.3 per cent higher respectively, reflecting increased domestic demand.
Executive Summary
Live Cattle and Beef
Calf production figures are unchanged from previous estimates. Mexico’s beef production for 2010 is revised higher than previously estimated to reflect the new official forecast. With improving worldwide economic conditions, Mexico’s 2010 beef exports figure is revised up due in part to higher prices within the Asian markets for Mexican beef. However, beef imports are forecast slightly lower than previous estimates but still higher than 2009. This is due in part to the slow income recovery and the recent increase in consumer taxes.
Live Hogs and Pork
Pork production for 2010 is revised downward from previous estimates, but still higher than 2009. Factors influencing this revision are the international economic crisis, H1N1 outbreaks, and the Mexican Government’s increase in consumer taxes. The Mexican pork sector is restricted in the level of expansion which can occur to meet the increasing demand. Pork imports for 2010 and 2009 are revised 8.9 and 8.3 per cent higher, respectively, reflecting the increased domestic demand. In 2010, pork exports are expected to recover, although the recovery is lower than previously estimated. This is in part due to the delay in obtaining sanitary agreements with China to start exporting to that market. Furthermore, Mexico’s efforts to open new export markets are restrained due to the lack of USDA recognition of areas free of Classical swine fever (CSF) in Mexico.
Data included in this report are not official USDA data. Official USDA data are available by clicking here.
Production
Cattle/Beef
The 2010 cattle production forecast is unchanged from the previous estimate. Figures for calf production for 2009 and 2008 are unchanged. The 2010 total cattle ending inventories are forecast slightly lower than previously estimated due to a higher slaughter estimate (2 per cent). Larger slaughtering is the result of a Mexican Government support programme to increase slaughter within Federal Inspected Facilities (TIF). Slaughtering for 2008 is revised upward to reflect official data.
The 2010 cattle production forecast is unchanged from the previous estimate. Figures for calf production for 2009 and 2008 are unchanged. The 2010 total cattle ending inventories are forecast slightly lower than previously estimated due to a higher slaughter estimate (2 per cent). Larger slaughtering is the result of a Mexican Government support programme to increase slaughter within Federal Inspected Facilities (TIF). Slaughtering for 2008 is revised upward to reflect official data.
Swine/Pork
Swine production estimates are unchanged. For 2010, higher slaughter is forecast as a result of a Mexican government support programme encouraging better slaughtering techniques. The 2009 slaughter figure is being revised up as a result of consumption recovery which resulted from the lower prices recorded after H1N1 outbreaks. Slaughtering for 2008 is revised up 2.6 per cent to reflect new official data. Loss figures are adjusted for 2010, 2009 and 2008 due, in part, to better genetics within the Mexican sector, herd management and improved production techniques.
Swine inventory data are revised downward for 2010, 2009 and 2008 due to higher slaughter and lower loss.
The 2010 pork production forecast is revised down to 1,166 TMT, which is slightly higher than the 2009 new estimate (1,162 TMT) and reflects official forecasts. Despite many producers having been impacted by the H1N1 outbreaks, official 2009 production data show an increase of 0.1 per cent over the 2008 level. Production for 2008 is unchanged.
Consumption
In spite of domestic fiscal policy changes, which have increased the cost of gasoline, transportation, energy, and taxes, the consumption of beef and pork is expected to increase in 2010. Moreover, this increase is higher than previously estimated.
Cattle/Beef
Beef consumption for 2010 is revised up 4.7 per cent from previous estimates, supported by strong exports to markets within Asia and slightly higher consumption by upper-middle-income families in Mexico. Although beef prices remained higher than pork and chicken throughout most of 2009, which should have limited consumption to middle and upper-income consumers, consumption is revised up 4.9 per cent. This higher consumption is supported by the demands of upper-middle and upper-income consumers, tourism, and the switch from pork to beef as a result of the H1N1 outbreaks.
Swine/Pork
Total consumption for 2010 is revised up 2.6 per cent. Mexico’s pork consumption is expected to continue growing in 2010, fueled by an increased demand by the processing industry and strong demand in the restaurant and hotel sector.
In spite of the international economic crisis, H1N1 outbreaks and low consumer perception of pork meat, pork consumption for 2009 is revised 3.4 per cent higher. This increase is due to lower pork prices and positive results from a media campaign which occurred after the H1N1 outbreaks.
Mexico’s meat processors will continue to import US pork variety meats because of the lack of domestic production. The increasing availability of pork cuts and variety meats (hams, sausages, etc) in Mexico’s growing retail industry continues to support consumption. Furthermore, the economic recovery should support the purchases of value-added products by middle and upper-income consumers if prices don’t escalate.
Trade
Cattle/Beef
Import figures for live cattle for 2010 and 2008 are unchanged. However, the 2009 figure is 20 per cent higher than previously estimated, but still 80 per cent lower than live cattle imports recorded in 2008. The international economic crisis and minimal repopulation of livestock, principally within the dairy sector, suppressed the 2009 figure.
The beef import figure for 2010 is expected to reach 330,000 MT, down 1.5 per cent from previous estimates due to slower consumption recovery. Additionally, the Mexican Government continues to maintain BSE restrictions on US imports of bone-in beef and small intestines. Although, a prevailing Mexican policy to apply a 25 per cent tariff to non-NAFTA imports will continue to limit beef imports from third countries, thus favoring imports from the United States if the BSE restrictions are mitigated.
The beef import figure for 2009 is 7.3 per cent higher than previously estimated. Upper-middle and high-income consumers continued to purchase beef despite the international economic crisis and additional purchases occurred as people switched from pork to beef during the H1N1 outbreaks.
For 2010, the live calf export estimate is unchanged; however, the 2009 figure is revised up 4.9 per cent to reflect official USDA data.
Mexico’s beef exports are expected to grow in 2010, reaching an estimated 55,000 MT CWE, which is 22.2 per cent higher than previously reported. Growth prospects are chiefly tied to the US market. However, Mexico continues to expand sales into markets within Asia such as Japan and Korea. The value of beef exports (fresh and frozen) to the United States jumped substantially in 2009 to US$ 115.7 million compared to US$ 80.4 million in 2008 for the same time period (January – November figures).
Swine/Pork
Live swine imports for 2010 and 2009 are revised down 33.3 and 30 per cent, respectively, from previous estimates. Historically, imports were of live swine weighing 50 kilograms or more. However, recent imports are principally hogs classified as pure breed race (HS: 01031001) hogs. Furthermore, importers have switched from live animals to raw or finished pork products.
Live swine imports for 2010 and 2009 are revised down 33.3 and 30 per cent, respectively, from previous estimates. Historically, imports were of live swine weighing 50 kilograms or more. However, recent imports are principally hogs classified as pure breed race (HS: 01031001) hogs. Furthermore, importers have switched from live animals to raw or finished pork products.
The recovery of Mexican pork exports for 2010 will be lower than expected. The figure is 10.5 per cent lower than previously reported due to the lack of USDA recognition of areas free of CSF in Mexico. For 2009, total pork export figure is revised 12.8 per cent lower due to a higher impact from the H1N1 outbreak and a lack of international pork demand. Mexican pork exports to Japan recorded a decline of 31.4 per cent to 38,038 MT in 2009 based on figures from January-November.
Policy
The Ministry of Agriculture (SAGARPA) continues to seek USDA recognition for Classical swine fever (CSF) disease-free areas in Mexico. USDA/APHIS has provided technical support and continues to do so in order to complete the required regulatory process as outlined in Title 9 Part 92 of the Code of Federal Regulations. Despite the Mexican pork sector’s understanding of the US regulatory process for obtaining disease-free area recognition, the bureaucratic process is trying the nerves of the sector. For this reason, USDA, US Meat Export Federation (USMEF) and US Poultry and Egg Export Council (USAPEEC) have begun collaborating to assist SAGARPA in fulfilling the US requirements to obtain recognition of CSF disease-free areas.
SAGARPA announced on 29 January 2008, that the import of frozen meat and meat products in “combos” will be prohibited. Combos are large, plastic-lined, palletized cardboard boxes of the same product from the same establishment. Mexico delayed implementation of 100 per cent intrusive sampling of combos at the border, until 15 May 2010.
Due to the volume of trade using combos, a legal requirement for 100 per cent organoleptic inspection, microbial testing, and periodic discoveries of non-agricultural contraband in combos (e.g., smuggled shoes and firearms), Mexican authorities have struggled to develop a risk-based inspection system that will not impede trade. Uncertainty surrounding the nature of a new inspection system as well as its date of implementation arouses concerns among meat traders.
For 2010, Mexico’s Congress authorized a tax increase thus reducing expenditures for food, especially among low-income families. Beef and pork product purchases could be affected by these new taxes. Furthermore, the cost of production for meats within Mexico could increase due to higher costs of gasoline, transportation, and other energy inputs.
For 2010, the GOM has created a new livestock programme called “Ganaderia por Contrato” (Livestock Contract) with a budget of approximately 500 million pesos (US$ 39.3 million) [1]. This programme includes support for calf production to supple feed lots.
The GOM share risk programme [2] budget will increase 68 per cent, to 1,654 million pesos (US$ 130 million) in 2010, as compared to the 2009 level. One programme of note is PROVAR, which supports the creation of value-added agricultural products (including red meat) and is budgeted at 400 million pesos (US$ 31.45 million) for 2010.
During 2010, the GOM’s “Adquisicion de Activos productivos” (Acquisition of performing assets) programme established strategies to improve the competitiveness of the beef and pork meat sectors. Currently, these strategies are funded at 600 million pesos (US$ 47.17 million) for beef and 120 million pesos (US$ 9.43 million) for pork.
[1] Exchange rate: 12.72 pesos per dollar on 4 March 2010.
[2] This resource is managed by The Shared Risk Trust (FIRCO), a parastatal entity.
Marketing
The Mexican Congress approved a total budget of 250 million pesos (US$18.5 million) for trade shows and export promotion of agricultural products. Red meat producers could obtain funding to promote exports of Mexican red meat products through out the world. In addition, the Government of Mexico has established a government loan programme to promote the production of value-added products.
US Meat Export Federation (USMEF), a non-profit, industry-sponsored trade organization dedicated to increasing exports of US red meat products in all foreign markets, is very active in Mexico. Within Mexico, USMEF has actively promoted red meat products in various large retail and food service exhibitions within USDA/Agricultural Trade Show Pavilions. In addition, USMEF conducts programmes to increase the number of US meat products within the Mexican market.
The Agricultural Trade Office (ATO) in Mexico will participate in the following trade shows to promote U.S exports: SAGARPA (13-14 April 2010), Puerto Vallarta (21-24 April 2010), Alimentaria (1-3 June 2010), Expohotel 2010 (16-18 June 2010) and ABASTUR 2010 (3-5 August 2010). For further information direct your questions to:
US Agricultural Trade Office (ATO)
Liverpool # 31 06000 Mexico City
Ph. (52-55) 5140-2614, 5140-2671
Fax (52-55) 5535-8557
Garth Thorburn, Director
Further Reading
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March 2010
