Highlights

Mexican poultry production is forecast to grow 1.5 per cent in 2011, a slightly higher increase than that expected for 2010 (one per cent). Better economic indicators and hopes for higher consumption are the principal motor for this recuperation. Imports of US poultry products will continue increasing, principally of chicken leg quarters. A solution to the Russian ban and Chinese duties on US poultry products, the exclusion of the poultry sector from a possible agreement with Brazil and resolution of the monopoly investigation of chicken products are matters of principal concern to the Mexican poultry sector. Turkey production will increase in 2011 by 15 per cent, reaching the level of 2008.

Summary

For 2011 the outlook for the Mexican poultry sector is for higher production than in either year since 2008. Mexican economic recovery indicators will be reflected in the poultry sector; broiler meat production is forecast to increase 1.5 per cent in 2011, slightly higher than that expected in 2010 (one per cent).

For 2011, the outlook for the Mexican poultry sector is for higher production than in either year since 2008. Mexican economic recovery indicators will be reflected in the poultry sector; broiler meat production is forecast to increase 1.5 per cent in 2011, slightly higher than that expected in 2010 (1.0 per cent).

The duties imposed by China on US poultry exports and the Russian restrictions on US chicken have created pressure to sell US poultry products in the northern states of Mexico. Additionally, the government of Mexico (GOM) seeks to negotiate a free trade agreement with Brazil, which could cause serious economic problems for the Mexican poultry sector.

Note: Data included in this report are not official USDA data. Official USDA data are available online [click here].

Production

Broiler meat

For 2011, Mexican broiler meat production is forecast to increase more than one per cent. This forecast increase in production is dependent on continued economic recovery bolstering consumption. As with any year, any increase in Mexican broiler meat production will be affected by international grain prices. Industry sources believe the Mexican economy will recover to 2008 levels; however, Mexican broiler meat production will not surpass 2008 production levels due to the surplus of inexpensive US chicken leg quarters.

For 2010, production is revised approximately one per cent higher due to a better-than-expected economic recovery.

Broiler production for 2009 is revised down (0.39 per cent) due to a stronger-than-expected production decline. According to the National Poultrymen´s Union (UNA), a decline of 2.5 per cent occurred from 2008 to 2009 due to the economic crisis, lower family incomes, the H1N1 outbreak, and over-production in 2008.

Turkey meat

Turkey meat production for 2011 is forecast to increase 15 per cent, reaching the pre-crisis level due to the continued economic recovery, bolstering consumption. However, Mexican turkey production will continue to be small, representing only 10 per cent of total consumption.

Turkey production for 2010 and 2009 is revised lower, reflecting data from UNA. These revisions reveal a larger-than-expected effect on turkey production due to the past economic downturn. According to UNA, last year, Bachoco – the largest poultry-producing firm in Mexico – and other producers suspended turkey production due to the effects of the economic crisis. Production capacity will slowly return in the remainder of 2010.

Given the suspension of production in the northern states, the state of Yucatan accounted for 27 per cent, compared to 21 per cent the year before, of total turkey production. The state of Chihuahua, normally the leading turkey producing state, accounted for only 16 per cent out of 2009 total production. However, this change is not expected to continue in future years.

Mexican poultry sector statistics

In 2009, the Mexican poultry sector contributed the following to the Mexican economy:

• Poultry production generated 1.143 million jobs, of which 190,000 are direct and 952,000 are indirect.
• Poultry production represents 19.8 per cent of the gross agricultural product and 0.8 per cent of the Mexican gross domestic product.

In 2009, the Mexican poultry production sector represented 63.3 per cent (chicken 34 per cent, turkey 0.2 per cent and eggs 29.1 per cent) of all Mexican livestock production.

The Mexican poultry sector produces the number one meat product, chicken, which is mostly produced in 14 states. Of total poultry production, broiler meat represents 92 per cent. Two states are the major turkey producers: Yucatan (27 per cent) and Chihuahua (16 per cent). Mexican egg production is concentrated (75 per cent) in three states: Jalisco, Puebla and Sonora.

Poultry producers continue to be major users of imported feedstuffs from the United States. According to the UNA, feed consumption for 2009 was estimated at 14 million metric tons (MMT), (8.8MMT of feed grains, 2.7MMT of oilseed and protein meals and 2.4MMT of other raw materials). UNA estimates that feed consumption will grow about 1.43 per cent in 2010. Furthermore, broiler meat production consumed 7.6 MMT of feed while turkey production consumed 40,000 metric tons (MT).

The average Mexican chicken producer’s total production cost is 88.7 per cent direct and 11.3 per cent indirect costs. The main direct costs are feed (66.3 per cent) and chicks (9.5 per cent).

Industry consolidation is expected to continue. Furthermore, the industry continues to invest in infrastructure despite the economic downturn. More consolidation is taking place in an effort to cope with higher input prices. In 2009, three leading companies accounted for 59 per cent of total domestic production of broiler meat. Medium-sized companies have merged into cooperatives and associations, with smaller players becoming contract producers. Despite these efforts, this year medium-sized firms continue to lose market share to large firms.

In 2009, there were 22 Federally Inspected Facilities (TIF), one more than last year, and sources report that two more are possibly coming on line that will focus on value-added chicken products. According to UNA data, in 2009, 718 million birds were slaughtered in TIFs, a decline of 6 per cent from 2008 (764 million). The states experiencing the decline were Queretaro, Puebla, Nuevo Leon and the area of Comarca Lagunera. In contrast, slaughter increases occurred in the states of Veracruz, Sonora and Yucatan.

Grow-out period and genetics

The average bird grow-out period depends largely on where and how the bird will be sold. For live birds and whole chickens (New York dressed), which are commonly sold in street markets, the average grow-out period is 49 to 56 days. Birds for the ready-to-cook (RTC) broiler market have an average grow-out period of 40 to 44 days. Those grown for sale in supermarkets (RTC and chicken parts) are typically grown out in 44 to 49 days. The average daily gain is 36 to 44 grams per bird. Bird weight when marketed is on average 2.2kg. The poultry industry reports that the average feed conversion ratio is 2:1.

Genetics are usually sourced from the United States. The main chicken genetics present in the flocks in Mexico are Ross (87 per cent) and Cobb (nine per cent). The main turkey breeding flocks in Mexico for 2009 used Nicolas. Producers import almost all of the grandparent and parent stock and are also importing fertile eggs for light and heavy breeders.

Consumption

For 2010, Mexican per-capita consumption of chicken is forecast to maintain the same level as 2009. Turkey will achieve 1.78kg per capita per year. During 2009, Mexican per-capita consumption of chicken was approximately 25.88kg, and for turkey 1.44kg per year, according to UNA data. For the past 10 years, per-capita consumption of chicken has increased 30 per cent and of turkey 36 per cent. This trend will only be maintained with the introduction of new value-added products with consumer-friendly prices.

Broiler meat

For 2011, broiler meat consumption is forecast to increase approximately two per cent, following the same growth as in 2010. Consumption will be supported by economic recovery, the affordability of chicken relative to other meats, increased use in processed food products, and improved product quality.

According to industry sources, in 2009, whole broilers (RTC) accounted for 26 per cent of chicken meat consumption, while chickens sold in wet markets and stalls (roasters New York dressed) accounted for 20 per cent of the total – a one per cent decline. Live birds represented 29 per cent of total broiler meat consumption, an increase of two per cent year on year. Broiler meat purchased in supermarkets increased from 12 to 14 per cent (broilers and roasters RTC), and chicken cuts fell from 10 to eight per cent of total purchases. Value-added products (nuggets, marinados and cordon blue) account for about three per cent of total consumption, which is a one per cent below 2008.

Turkey meat

Turkey meat consumption for 2011 is forecast to increase 10 per cent to 165,000MT due to recovery of disposable consumer income. However, a larger-than-expected effect on the turkey sector was experienced due to the past economic downturn. Thus, 2010 and 2009 estimates have been revised lower than the previously reported.

Poultry processed products

Consumption of processed chicken and turkey products (value-added), such as sausage and hams, is also forecast to recover in 2011, due to the recovery of disposable consumer income. For 2011, consumption should return to pre-economic crisis 2008 levels, and will result in an increase of value-added production of approximately two per cent. The greatest recovery will occur with processed turkey products (patties, nuggets, cold cuts, turkey hams, hot dogs); however, the majority of turkey sales will occur during the Christmas season (75 to 80 per cent) sold as uncooked whole turkeys, of which the majority are imported.

Prices

For the first half of 2010, broiler prices have recovered compared to the depressed prices seen in 2009. From April to June 2009, oversupply and the H1N1 flu outbreak contributed to a decline of the broiler prices. During the second half of 2009, depressed international broiler prices contributed to lower domestic prices. Furthermore, the price of chicken leg quarters (CLQs) for the first half of 2010 was down when compared to the same period of 2009 due to high international supplies.

Trade

In 2011, the United States will continue as the main supplier of exports to Mexico, approximately 95 per cent of Mexico´s chicken imports and 98 per cent of turkey imports. The remainder will be covered by Chile and Canada.

The top two products imported by Mexico are fresh or chilled mechanically deboned chicken meat and CLQs (both chilled and frozen), although imports of poultry products are increasingly diversified. The first product is imported principally by domestic sausage and cold-cut industries and the second is imported to be sold in supermarkets. Large meat processors prefer fresh, refrigerated product, while small and medium processors tend to use frozen product.

During 2009, Mexico imported US$475.3 million of chicken products, which was 6.6 per cent higher than the 2008 level, and $258.7 million of turkey products, 25 per cent lower than in 2008.

On the other hand, in 2009, Mexico exported $16.6 million of chicken to the world. Main destinations were United States, Vietnam and Congo. Only 150 tons ($342,000) of turkey products, principally processed meat (HS code: 160231), was exported, all to the United States.

Broiler meat

For 2011, imports of chicken cuts, mainly CLQs, and mechanically deboned chicken are forecast to increase approximately four per cent, principally to cover the increasing demand for raw material in the food processing industry.

In spite of the economic crisis, imports for 2010 are expected to increase approximately seven per cent compared to 2009; however, whole chicken imports are expected to decline. For the time period between January and April 2010, whole chicken imports, both chilled and frozen, declined more than 90 per cent principally due to prices. In contrast, imports of chilled CLQs have increased approximately 33 per cent compared to the same period during 2009. All of these imports originated in the United States and the volume is forecast to continue increasing.

Imports of broiler meat for 2010 and 2009 were revised downwards, based on industry statistics.

The meat processing industry is expected to continue importing raw materials such as mechanically deboned chicken and turkey meat; furthermore, for 2011 greater demand of further processed meat is expected. Nevertheless, from January to May, the importation of frozen MDC from the United States fell by 12.6 per cent and by 32 per cent from Chile.

On 19 July 2010, the Government of Mexico lifted the import ban imposed on poultry and poultry products produced within the Meeker county, Minnesota.

In 2011, Mexican chicken meat exports are expected to increase 20 per cent as a result of approval having been given to certain establishments to export to foreign countries, including the United States. At the end of 2010, the Government of Mexico is expected to list a second plant as eligible to export to Japan.

According to UNA, during 2010, Mexico started exporting chicken feet to Asia, chicken breast and boneless CLQs to Japan, and powdered egg to Africa. PS&D export figure does not include exports of chicken sausage (HS code 16011001) which is estimated at 4,000MT for 2010.

Total exports of chicken meat for 2010 and 2009 remain unchanged. However, for 2010 exports of chicken whole and parts were revised up and down respectively, based on industry statistics.

Turkey meat

After the economic crisis that reduced the consumption of turkey products, turkey meat imports are forecast in 2011 to increase approximately 10 per cent due to recovery of consumer purchasing power.

From January to May 2010, import of sausages (turkey and chicken under HS code: 16010001) increased 5.6 per cent compared to the same period in 2009, and almost returned to the level of 2008. Ninety seven per cent of these imports come from the United States, confirming that US value-added turkey products presence are back in Mexico as the economy strengthens.

For 2010 and 2009, turkey meat imports were revised lower due to a larger-than-expected effect on the turkey sector by the economic downturn. In 2009 and 2010, a larger-than-expected consumption reduction was registered owing to the international economic crisis, the peso devaluation and H1N1 outbreak which in turn led to a reduction in imports.

From January to May 2010, turkey meat imports were 68 per cent fresh parts, 21 per cent frozen parts, five per cent whole, and five per cent mechanically deboned meat. The United States provided 99 per cent of these imports – more than in 2009 (96 per cent).

Even though turkey imports cover 90 per cent of consumption, from January to April, imports to Mexico declined approximately 3.5 per cent in total. Imports from Chile declined 81 per cent.

Although Mexican turkey exports are small (350 to 360 metric tons expected for 2010), from January to April 2010, Mexican turkey exports increased almost 160 per cent over the same period of 2009, principally further processed meat (HS code 1602.3101) to the United States (99 per cent) and to Guatemala (1.0 per cent).

Policy

Brazil Free Trade Agreement

The Mexican and Brazilian presidents stated their intention to sign a free trade agreement (FTA). However, the Mexican poultry industry strongly opposes an FTA between Mexico and Brazil. The poultry industry perceives this proposed FTA as a threat and is lobbying against it. According to UNA, the Mexican poultry industry will be unable to compete against Brazil due to limited availability of feed grains and commercial credit in Mexico. Moreover, the Mexican poultry producers would face limited market access in Brazil due to high sanitary barriers for imported poultry products.

New regulations

The GOM (Secretariat of Economy) published on April 5, 2010, a new version of Mexican regulation NOM-051-SCFI/SSA1-2010, ‘General labelling and sanitary specifications for pre-packaged food and non-alcoholic beverages’. (Spanish: Norma Oficial Mexicana NOM-051-SCFI-1994 Especificaciones generales de etiquetado para alimentos y bebidas no alcohólicas preenvasados) or NOM-051.

The new NOM-051 includes several changes in labelling. All pre-packaged food products and non-alcoholic beverages for retail sale directly to consumers are required to comply with NOM-051(including imported poultry meat). Thus, it is important that all US companies exporting to Mexico be aware of these changes and make appropriate modifications to the labels of their products. The new regulation will come into effect on 1 January 2011.

Principal changes to NOM-051 may be found in GAIN [click here].

Trusty importer programme and inspection of combos

SAGARPA continues developing a plan of modernisation of import inspection procedure. As part of this plan, the UCON (trusted importer programme) is being implemented. Through this programme, import inspection will occur in the TIF establishment where the imported meat will be processed. According to SENASICA, the UCON programme may reduce inspection at the border by 48 per cent, since that is the volume of meat imported by TIF facilities (additional information about UCON can be found in [click here]).

A subsequent step of the plan is expected involving the procedure for inspecting meat shipped in combo bins. SENASICA officially advised the border inspection points that the combo inspection procedure for meat was postponed indefinitely pending publication in the Diario Oficial (Federal Register). This publication will contain a new sampling procedure, which SENASICA is currently drafting, and may be implemented in 2011.

It is possible that this procedure may be similar to the Canadian or US system. SENASICA has stated that the plan is part of an effort to harmonize import procedures with those of its NAFTA partners, and it will not seek to reduce the volume of meat trade.

Mexico's animal disease status

Domestic producers continue to invest in improving sanitary standards in their flocks as well as in obtaining better technology. Furthermore, new TIF establishment projects are being developed. Finally, both government-and private-sector efforts are focusing on obtaining USDA recognition of disease-free areas within Mexico. USDA recognition will allow Mexico poultry export to reach new markets.

According to the GOM, Mexico has been free of avian Salmonella disease (S. gallinarum) since 2009. The current status for avian influenza (AI) and exotic Newcastle disease (END) is as shown in the link below.

Government actions and support related to the sector

On 10 June 2010, the Health Secretariat (SALUD) and Educational Secretariat (SEP) sent to the Federal Commission for Better Regulation (COFEMER) the draft of ‘General Guidelines for the sale and distribution of food and drink to the establishment at the primary schools’ (Lineamientos generales para la venta y distribución de alimentos y bebidas en los planteles de educación básica). The guideline's objective is to regulate the preparation, distribution and sale of healthful food and drink in primary schools, contributing to reduction of obesity and chronic diseases. This proposal may support consumption of poultry products, principally eggs. The only products that may be negatively affected are sausages and ham; the Mexican Meat Council (Comecarne) is working with other affected sectors and the GOM to clarify the draft, principally to avoid demonising products, in order to preserve consumer confidence. It is possible that the guidelines will be published this year in the Diario Oficial (Federal Register) and be in force in January 2011.

SAGARPA continues working to incorporate COFEMER and private industry comments into the proposed regulation to the Animal Health Law. However, publication of this new regulation may be delayed due to internal debates within SAGARPA over how to implement the regulation. The Mexican government recognizes the US National Poultry Improvement Plan (NPIP) as equivalent to regulation NOM-044-ZOO-1995 ‘National Campaign against Avian Influenza’, as amended and implemented on 14 August 2006. All Mexican import requirements for poultry and poultry products are outlined in the Zoosanitary Import Requirement Sheets (HRZ). Currently raw poultry imports are to comply with one of two options regarding avian influenza (AI) testing: a) a negative result on 59 samples to AGID or ELISA tests, or b) that the flock/farm of origin is recorded in the NPIP.

As part of efforts to monitor and control the transportation of poultry products, SENASICA has began to approve third parties for controlling the movement of poultry products between TIF establishments.

Marketing

Chicken and turkey Meat

UNA promotes consumption, and is using opportunities, such as the ‘General Guidelines for the sale and distribution of food and drink to the establishment in primary schools’ promoted by Secretariat of Health (Salud) and Public Education Secretariat (SEP). These guidelines give UNA the opportunity to recommend poultry product consumption, including the sale of hard-boiled eggs in schools. UNA and USAPEEC have been working on a project since last year to put vending machines with hard-boiled eggs in offices, malls and other public areas.

UNA and USAPEEC are currently promoting the consumption of eggs through an annual media campaign, conferences for training housewives, chefs and general consumers. This campaign will be on line for three months and will conclude on Egg Day in October. In addition, UNA is working with the National Poultry Institute (NPI) to educate consumers about the benefits of poultry, eggs and poultry products.

Part of the strategy to increase production and promote consumption is a GOM effort to sign sanitary agreements which will allow Mexican chicken exports to enter the Chinese, Singaporean, Taiwanese, and Hong Kong markets (under negotiation for two years), to promote chicken and egg consumption as cheap protein sources and as part of the campaign against obesity, and to put in place an export project for training domestic companies in meeting sanitary requirements.

US Poultry and Export Council (USAPEEC) continues collaborating with UNA in different projects to promote poultry products as a protein source that competes with high-carbohydrate and fatty foods.

Poultry companies are the most highly integrated meat sector in Mexico; now almost all companies are on the road to merchandising of their own products. While larger companies are investing more in producing value added-products under their own brands, medium and smaller companies are investing more in distributing products which are helping them to be more competitive in the domestic market.

USAPEEC, a non-profit, industry-sponsored trade organization dedicated to increasing exports of US poultry and egg food products in all foreign markets, is very active in Mexico. USAPEEC’s Mexico office has actively promoted poultry products in various large retail and food service exhibitions. Along with Mexico’s poultry industry, USAPEEC has promoted the exchange of information and technical expertise between the US and Mexican poultry industries.

The Agricultural Trade Office (ATO) in Mexico will participate in the following trade shows to promote US exports: ANTAD (March 2011), Alimentaria (May-June 2011), Expohotel and ABASTUR (21-23 September 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

An additional bi-annual show offering good opportunities for exporters is:

EXPO CARNES 2011
Meat Industry show and International meeting
Monterrey - México - CINTERMEX
2 to 4 February 2011
For information contact:
Asociacion Promotora de Exposiciones A.C
52 (81) 8369-6660, 64 and 65
[email protected]
[email protected]

Further Reading

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You can view the full report by clicking here.

September 2010