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USDA International Egg and Poultry


25 April 2012

International Egg and Poultry Review: MexicoInternational Egg and Poultry Review: Mexico

Recently, media reports noted that negotiations between the US and Mexico regarding the anti-dumping case have ceased. According to unofficial reports, the proceedings now lay in the hands of the Mexican government.
USDA International Egg and Poultry

Prior to this, the last official report was a preliminary determination issued January 19, 2012 by Mexico’s Secretariat of Economy (SE) finding sufficient evidence to indicate dumping conditions did exist on US imports of chicken leg quarters. An investigation continued after the announcement without the imposition of any provisional compensatory duties as both countries entered conciliatory negotiations.

In the preliminary determination, SE revealed the price discrimination margins for some producer/exporter businesses to be between 62.90% and 129.77%. Other exporting businesses would be applied to the same residual price discrimination margin of 129.77% due to insufficient information to calculate specific dumping margins. The investigation was conducted in response to a petition submitted July 2, 2010 to SE-UPCI (International Commercial Practices Unit) by Bachoco, Patsa, and Buenaventura. Presently, it is unclear when a final determination regarding the anti-dumping investigation of US fresh, chilled, and frozen chicken leg quarters (HS0207.13.03 and HS0207.14.04) will be issued by Mexico. However the final determination could drastically change any recent trade forecasts posted by USDA FAS. The US exported a total of $142,730,000 worth of chicken leg quarters to Mexico, 26.4% more than 2010 ($112,949,000) and 58.3% higher than 2009 ($90,189,000).

Production

USDA Foreign Agricultural Service (FAS) recently revised its broiler meat production forecasts for Mexico in 2012 slightly higher to 2.9 million metric tons (MMT). The rise is attributed to the growing prevalence and importance of vertical integration, increased industrial and commercial integration to satisfy domestic consumers with better and more affordable products (i.e. ready-to-cook, marinated), and industry’s establishment and addition retail points of sale.

Despite forecasted production increases Mexico’s broiler industry will have to contend with high grain prices, increased competition for feed from the pork and beef sectors, and the worst drought on record in 70 years affecting 19 of 31 states. Vertical integration will help offset some of the negative effects of high grain prices. It is estimated that feed costs represent between 75-80% of total production. In 2011, average feed costs ranged from 13-18.2 pesos per kilogram (US $0.47 to $0.66 per pound).

Consumption

Broiler meat consumption in 2012 is projected slightly higher than previously estimated as consumer demand remains strong. Broiler meat continues to be one of the most affordable proteins, especially dark meat (i.e. chicken leg quarters), behind eggs for low-income consumers. Generally households with higher incomes prefer higher value cuts and value-added products. Domestic broiler meat prices have increased 20% in the first quarter of 2012, along with pork and beef prices. As a result, poultry meat consumption is expected to remain stable. Broiler meat was marketed as follows in 2011: 31% live chickens, 24% for roasting purposes, 20% for distribution in public markets, 15% marketed in chain stores, 7% sold as cuts, and 3% marketed as value-added products. It is estimated that broiler meat sales will follow a similar trend in 2012 with the exception of live chicken sales climbing to 33%.

Trade

Import forecasts for Mexico are projected slightly higher in 2012 (630,000 MT) as increased domestic production is not expected to fulfill domestic consumption. Mexico continues to aggressively market broiler meat exports to other markets primarily located in Asia and Central America, especially high value processed products and lower value broiler cuts. However USDA export forecasts for 2010, 2011, and 2012 were revised downward to reflect the removal of certain chicken parts not considered broiler meat manifesting in Mexico’s export trade statistics from USDA data. In particular, trade figures have been reduced to exports to Vietnam, Hong Kong, and other Asian markets that most likely included chicken paws. Unofficial forecasts predict 2012 exports to be 9,000 MT.

On another note, USDA FAS recently published an attaché report listing some procedures and measures for US exporters to follow to help prevent border entry difficulties, shipment delays, and additional costs. Suggestions include ensuring product meets import regulations and have proper documentation, certification, and labeling, as well as promoting the use of experienced freight forwarders and Mexican customs brokers. In the event of product detainment and rejection, the Agricultural Trade Office (ATO) in Monterrey, Mexico is able to assist in clarifying the problem and determining the actions needed in resolving the trade issue.

Source: USDA FAS Attaché/News Wires



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