Mexico Poultry and Products Semi-Annual Overview - January 2004

By the USDA, Foreign Agricultural Service - This article provides the poultry industry data from the USDA FAS Poultry and Products Semi-Annual 2004 report for Mexico. A link to the full report is also provided. The full report includes all the tabular data which we have ommited from this article.
calendar icon 2 February 2004
clock icon 9 minute read
Poultry Industry Semi-Annual Overview, January 2003: Mexico - By the USDA, Foreign Agricultural Service - This article provides the poultry industry data from the USDA FAS Poultry and Products Semi-Annual 2003 report for Mexico. A link to the full report is also provided. The full report includes all the tabular data which we have ommited from this article.

Report Highlights:

Chicken meat production and consumption for MY 2004 are forecast higher as producers are expected to produce and market more poultry meat due to Mexico’s ban on imports of U.S. beef following the detection of Bovine Spongiform Encephalopathy in the United States. Chicken prices are expected to increase, but continue to be cheaper than beef. Chicken imports remain unchanged for MY 2004, while imports of turkey parts for further processing are expected to increase. The safeguard agreement on chicken leg quarters has been working as expected. However, months after the conclusion of successful control programs, Mexico continues to maintain restrictions on certain U.S. states due to the earlier detection of Low Pathogenic Avian Influenza and Exotic New Castle Disease.

SECTION I. Situation and Outlook

Poultry Situation and Outlook
Mexican chicken meat production for MY 2004 (Jan-Dec) was revised upward as producers are expected to produce and market more poultry meat due to the detection of Bovine Spongiform Encephalopathy (BSE) in the State of Washington and Mexico’s subsequent ban on U.S. beef imports as of December 24, 2003. For MY 2004, the trend toward vertical integration and implementation of cutting-edge technology among producers that has characterized recent years continues. Chicken consumption is also forecast higher as beef consumers are expected to switch to cheaper chicken meat in the face of higher beef prices. Shifts to pork, turkey, and dry beans are also expected. No increase in chicken imports is expected as the safeguard agreement on chicken leg quarters (CLQs) is expected to maintain the additional protection for the industry as requested by domestic producers. Turkey meat production forecast remains unchanged for MY 2004.

Chicken and turkey meat imports, mainly mechanically deboned meat (MDM) and turkey parts for use in the sausage and cold meat industry, are by far the main poultry products imported by Mexico. Imports of these products for MY 2004 will remain strong as demand for MDM from Mexico’s food and meat processors continues.

Economic growth and investment in the poultry industry are expected to continue in MY 2004 as consumer demand for value-added poultry products continues to grow and prices are likely to rise in response to the BSE beef ban.

SECTION III. Narrative on Supply and Demand, Policy & Marketing

Chicken Meat - Production

Mexican chicken meat production for MY 2004 (Jan-Dec) is forecast higher as producers are expected to produce more meat in response to Mexico’s ban on U.S. beef imports effective December 24, 2003, following the detection of BSE in Washington State. The chicken meat production estimates for MY 2003 and MY 2002 remain unchanged. Effective marketing campaigns, strong financial positions among chicken processors, and continued improvement in product quality should all help to spur production.

In 2003, domestic producers indicated that the bird grow-out period was extended up to 56 days in some cases, as there was concern about how the timing and procedures for the final safeguard implementation would affect supplies. The average daily gain is 36-44 grams per bird and the average bird weight when marketed is 1.8 kg, but in 2003 average bird market weight increased to 1.92 kg.

Feed costs account for nearly 55-60 percent of the total cost of production. Increased vertical integration in the industry helps to lower production costs. In MY 2003, imported yellow corn averaged $1,500 pesos/MT (US$139.00/MT) while domestic sorghum prices increased from $1,500 to $1,700 pesos/MT (US$139.00 to $157.55/MT).

Domestic poultry producers continue to expand their use of cutting-edge technology. About 80 percent of total Mexican chicken meat is produced in large vertically integrated companies. Reportedly, industry consolidation and investment in infrastructure are expected to continue in the medium term and it is expected that the expansion of large vertically integrated companies will continue through growing investment in large-scale production operations.

Consumption
Chicken meat consumption for MY 2004 was revised upward reflecting an expected increase in poultry meat consumption because of the ban on U.S. beef imports. Consumption of pork, turkey, and dry beans is also expected to increase in response to the ban. Chicken prices are expected to rise along with beef prices while maintaining a discount to beef, leaving chicken as the cheapest meat alternative to beef. Domestic consumption estimates for MY 2003 were revised slightly upward compared to previous estimates due to increased demand from the processing industry.

Mexican consumers typically prefer chicken dark meat to white meat, however, medium and high-income consumers appear to be starting a trend towards a preference for white meat. If this trend continues, it could alter price and industry marketing patterns in Mexico. During 2003, wholesale average prices in Mexico City for whole chicken breasts were $29.60 pesos/kg (US$2.75/kg) and for broilers about $13.36 pesos/kg (US$1.24/kg). Wholesale prices for domestic CLQs were about $19.00 pesos/Kg (US$1.75/kg) while imported CLQs marketed at the border were on average $8.95 pesos/kg (US$0.83/kg). Consumption estimates for MY 2002 were revised downward based on industry information and official trade data.

Trade
Chicken and turkey meat are the primary poultry products imported by Mexico. Forecast imports of chicken cuts and mechanically deboned meat (MDM) for MY 2004 remain unchanged. UNA indicated that for MY 2004, the balance between chicken cuts and MDM could change favoring imports of chicken cuts over MDM, as the industry is seeking to shift some of the de-boning process to Mexico by importing more cuts in an effort to gain control over MDM production and improve the quality of value-added products. In general, Mexican processors continue importing MDM as an input for the domestic sausage and cold-cuts industries.

For MY 2003, imports of chicken cuts were revised upward due to increased demand for MDM from Mexico’s meat and food processors. MY 2002 chicken cuts imports were revised downward based on recent official data.

As reported in MX3099 a final safeguard was imposed on U.S. chicken leg quarters in July 2003. This safeguard will be in place for 5 years and the tariff will be phased down to zero in 2008. According to Mexican trade data, imported CLQs under H.T.S. 0207.13.03 & 0207.14.04 are 87,681 MT, as of October 2003. The TRQ’s for 2004 were announced in December 2003 as reported in MX3168.

Mexico will allow any imports of U.S. CLQs in excess of the duty free TRQ quantities established in the agreement to enter and be sold throughout Mexico at the high-tier tariff. Effective January 1, 2008, Mexico will provide full duty free access and eliminate the import license requirements for U.S. CLQs. (See MX3099 & MX3168).

On September 9, 2003, the Secretariat of Agriculture, Livestock, Rural Development, Fishery and Food (SAGARPA) cancelled the Exotic Newcastle Disease (END) ban on the five buffer states of Oregon, Idaho, Utah, Colorado and New Mexico. The announcement indicated that the epidemiological activities to control the Exotic Newcastle Disease outbreak, carried out by the Animal and Plant Health Inspection Service (APHIS/USDA), were successful in the buffer states. (See MX3124).

The following table shows how the current AI and END regulations are affecting U.S. poultry and poultry products exports to Mexico.

While the LPAI requirements (chiefly the Hemmoglutination Inhibition (HI) testing requirements) halted nearly all exports of raw chicken to the interior (exports to the border areas were exempt from the HI test) of Mexico from July 2002 through July 2003, exports of mechanically deboned meat (MDM) and poultry products for further processing were largely unaffected.

Policy
No further changes from MX3117

Marketing
Generic advertising campaigns have always been a good approach to increase domestic consumption of poultry products. For the last quarter of 2003, spots on TV & radio as well as advertisements on public open spaces were placed by UNA to promote chicken meat consumption. The main objective was to position poultry products as the most important food in Mexican households not just for the holiday season but for the entire year.

Turkey Meat - Production

The forecast for turkey meat production for MY 2004 (Jan-Dec) remains unchanged at 14,400 MT. Production estimates for MY 2002 and MY 2003 were kept unchanged reflecting recent official data. Domestic turkey meat production represents less than 10 percent of total poultry meat consumption. The latest official data shows that 84 percent of the commercial production is produced in the Northern states of Chihuahua and Sonora.

Consumption
Consumption in MY 2004 is forecast to increase as processors increase their imports of turkey parts for further processing in response to the ban on beef imports. The consumption estimates for MY 2003 & MY 2002 were revised slightly downward based on the most recent industry information and trade data. Consumption of turkey in the form of cold cuts continues to increase, primarily through sales in supermarkets and deli-restaurants. Cooked hams made from blends of domestic pork and U.S. turkey thigh meat are substantially cheaper than pure pork cooked hams. Despite the usual domestic consumption patterns where most of the whole turkey demand is during the Christmas season, middle and highlevel income consumers that frequent major national supermarket chain stores are shifting to the consumption of turkey meat added-value products, like hams and sausages. Average per capita consumption is estimated by UNA at 4.41 pounds for 2003 including whole turkey, turkey cuts and other turkey products.

Trade
The forecast for turkey meat imports for MY 2004 was increased to reflect higher imports of turkey parts for further processing. Imports for MY 2002 & MY 2003 were revised downward based on official trade data as the animal health food regulations in place during that time slowed down imports on U.S. turkey products. The Mexican ban on Chilean poultry imports was lifted in June 2003 and, although Chilean poultry imports are duty free under the Mexico-Chile Free Trade Agreement, there was no significant increase in imports. The United States continues to be the main supplier of turkey meat and products to Mexico. UNA indicated that imported parts and MDT for the last quarter of 2003 have been very successful.

Further Information

To read the full report please click here

List of Articles in this series

Poultry and Products report highlights for Various Countries
Poultry and Products report for Indonesia
Poultry and Products report for the EU

Source: USDA Foreign Agricultural Service - 30th January 2004

© 2000 - 2024 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.