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.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