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Mexico - Poultry and Products Annual 2009

by 5m Editor
27 November 2009, at 12:00am

Following a decline of 1.5 per cent this year, chicken meat production in Mexico is expected to increase in 2010, according to the latest GAIN report from the USDA's Foreign Agricultural Service.

Executive Summary

While the entire Mexican gross domestic product (GDP) is declining, the agriculture GDP is increasing and the Mexican poultry sector has an opportunity to expand. In 2010, the Mexican consumer will enjoy chicken, turkey and egg products at competitive prices. Furthermore, chicken will be the leading meat produced in Mexico.

Chicken meat production is expected to increase in 2010. However, it is anticipated to decline 1.5 per cent in 2009. Such a decline has not occurred for over a decade. This decline is primarily attributed to the economic crisis, industry consolidation, imported grain prices and continued competition from poultry imports.

Mexico lacks an equivalency agreement with USDA (Food Safety and Inspection Service) that would allow for the export of Mexican poultry meat and egg products to the United States, although efforts continue toward developing such an agreement.

Imports of frozen mechanically separated meat and cuts for further processing have declined, due to the volatility of the exchange rate. Another factor is the imposed import bans on products from regions of the United States due to a low-pathogenic avian influenza (LPAI) outbreaks. This year, exports from counties within Kentucky, Tennessee and Minnesota were banned from exporting product to Mexico.

Note: Data included in this report are not official USDA data. Official USDA data are available by clicking here.

Production

For 2008, the Mexican poultry sector contributed the following to the Mexican economy:

  • Poultry production generated 1.14 million jobs, from which 190,000 are direct and 950,000 are indirect, and
  • Poultry production represents 11.5 per cent of the gross agricultural product.

The Mexican poultry sector produces the number one meat product, chicken, and is principally produced within 14 states. Chicken meat represents 92 per cent of the total poultry production. Turkey meat production in Mexico is principally produced in two states: Chihuahua (25 per cent) and Yucatan (21 per cent). These two states account for approximately 46 per cent of the total turkey meat production of Mexico.

Poultry producers continue to be major users of imported feedstuffs from the United States. According to the Mexican Poultry Producers Association (UNA), feed consumption for marketing year (MY) 2008 was estimated at 13.7 million metric tons (MMT), (8.6 MMT of feed grains, 2.7 MMT of oilseeds and protein meals, and 2.3 MMT of other raw materials). UNA estimates that feed consumption will grow about 1.5 per cent in MY 2009. Furthermore, chicken meat production consumed 7.6 MMT of feed while turkey production consumed 52 thousand tons.

The second semester of calendar year (CY) 2009 is expected to be difficult for the poultry sector due to the economic crisis, lower family income and the instability of the exchange rate. Sixty-five to seventy per cent of the cost of production in Mexico is tied to the dollar so the devaluation of the peso directly affects the profitability of the sector. Feed costs in Mexico represented approximately 67 per cent of the total cost of production.

Chicken meat

Mexican chicken meat production is forecast to increase for MY 2010 (January-December) 2.5 per cent. This forecast is dependent on the dollar exchange rate, the recovery from economic crisis and exports. MY 2009 production was revised 0.5 per cent higher than the previous forecast. Over-production is expected to occur in the second half of 2009 due to improvements in productivity that have occurred over the recent past.

Chicken production for MY 2008 was revised upward (1.75 per cent) according to UNA data. Over-production in 2008 and the economic crisis will result in a production decline of 1.5 per cent in 2009.

Industry consolidation is expected to continue. Furthermore, the industry continues to invest in infrastructure despite the economic down town. More consolidation is taking place in an effort to cope with high input prices. In 2008, three leading companies accounted for 55 per cent of total domestic production of chicken meat. Medium-size companies will likely merge into cooperatives and associations, with smaller players becoming contract producers.

Table 3. Mexico: concentration of chicken production
Companies Share of production (%)
Size* 1996 2008 1996 2008
Large 2 3 33 55
Medium 27 28 40 41
Small 181 150 27 4
Source: National Poultry Union (UNA)
* GOM classifies a small company as having no more than 100 employees; a medium company has from 100 to 250 employees, and a large company has more than 250 employees.

In 2008, there were 21 Federal Inspection Facilities (TIF) and more are coming on stream, focusing on value-added chicken products. According to UNA data, in 2008, 764 million birds were slaughtered in TIFs, an increase of approximately 16 per cent since 1994.

Table 4. Mexico: 2008 poultry slaughtering by state
State Number of birds
(millions)
Participation %
Total slaughter
Jalisco 126.9 16.6
Comarca Lagunera 105.7 13.8
Queretaro 92.7 12.1
Puebla 85.9 11.2
Sinaloa 75.6 9.9
Yucatan 53.2 7.0
Nuevo Leon 46.8 6.1
Guanajuato 41.9 5.5
Hidalgo 39.0 5.1
Chiapas 35.5 4.7
Aguascalientes 26.6 3.5
San Luis Potosi 19.5 2.5
Sonora 7.5 1.0
Nayarit 3.1 0.4
Chihuahua 2.5 0.3
Veracruz 1.6 0.2
Total 764.2 100.0
Source: National Poultry Union (UNA)

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 cuts) are typically grown-out in 44 to 49 days. The average daily gain is 36 to 44 grams per bird. The average bird weight when marketed is on average 2.2 kg. 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 (78 per cent) and Cobb (19 per cent). The main turkey breeding flocks in Mexico are Nicholas with 75 per cent and Hybrid (Hendrix Genetics) with 25 per cent. Producers import almost all of the grandparent and parent stock and are also importing fertile eggs for light and heavy breeders.

Turkey meat

Turkey meat production for MY 2010 (January-December) is forecast to increase to 15,200 metric tons (MT) as demand for turkey meat continues to strengthen. Meat production for MY 2009 is estimated at 14,800 MT, a slight decrease (1.16 per cent) from MY 2008.

Domestic producers continue to face competition from US and Chilean imports, however. From January to May 2009, turkey imports declined approximately 22.5 per cent. Domestic turkey meat production represents less than 10 per cent of total poultry meat consumption, and domestic firms sell about 75 per cent of their production as uncooked whole turkeys for the Christmas season. The balance is sold as domestic turkey cuts and further-processed products such as turkey patties, nuggets, cold cuts, turkey hams, hot dogs and oven-cooked turkey legs.

Most turkey is produced in the states of Chihuahua (25 per cent), Yucatan (21 per cent) and Puebla (10 per cent) which represents 56 per cent of the total Mexican turkey production.

Consumption

In spite of the economic crisis, consumers are becoming more health conscious and changing diets to include lighter and healthier food choices, which include more poultry products. For 2010, turkey and chicken consumption is estimated to increase. According to INEGI [1], in 2008, gross family income decreased 0.9 per cent due to the economic crisis. However, poultry products, especially turkey products, enjoyed favourable demand, and consumption is still growing.

Within Mexico, per-capita consumption of chicken is approximately 25.47 kg, and of turkey is 1.97 kg per year.

[1] INEGI= Instituto Nacional de Estadistica, Geografia e Informatica. The US equivalent USDA, National Agricultural Statistics Service.

Chicken meat

Chicken producers will continue to enjoy the same demand for their products due to the affordability of chicken relative to other meats. Furthermore, increased usage in processed food products, along with improved product quality, will continue to support poultry consumption. For 2010, chicken consumption is expected to increase 2.31 per cent, principally value-added products and chicken cuts. However, the consumption for 2009 will not only remain steady, but also consumers prefer cheaper fresh whole chickens instead of chicken cuts because of the reduction in family income. Furthermore, a lower demand for chicken leg quarters (CLQ’s) is expected because of an increase in consumer prices. In contrast, in 2008, purchases of chicken cuts increased slowly.

According to industry information, broiler chickens (RTC) account for 26 per cent of chicken meat consumption, while chickens sold in wet markets and stalls (roasters New York dressed) account for approximately 21 per cent of the total. Live birds represent 27 per cent of total chicken meat consumption. Live chicken sales ,which have been trending downward for the past six years, increased one per cent this year. Chicken meat consumption purchased in supermarkets increased from seven to 12 per cent in 2008 (broiler and roasters RTC), and chicken cuts account for 10 per cent of total consumption. Value-added products account for about four per cent of total consumption, which is a three per cent decline from last year.

Prices

In spite of the H1N1 flu outbreak and the increase seasonal demand of chicken and turkey meat, because of the Lenten season[2] , the price of broiler declined along with chicken leg quarters in the first months of 2009.

For the third quarter of 2008, the price of CLQs was down as a result of lower production costs, the economic crisis and a higher exchange rate. Since then, prices have recovered although 2009 continues to be a volatile year. The first quarter of 2009, the price of CLQs was significantly higher compared to the first quarter of 2008 but the price of CLQs declined during the second quarter.

[2] In Mexico during Lent, poultry meat is the only acceptable meat product for consumption; only red meat is prohibited during this period.

Turkey meat

Turkey meat consumption for MY 2010 is forecast to increase 0.5 per cent to 221,000 MT owing to the availability of cheaper turkey processed products. Due to the economic down-turn, the 2009 estimate has been revised down from the previous estimate. MY 2008 consumption was revised to reflect industry data.

Consumption of turkey meat in the form of cold cuts continues to increase primarily through sales in supermarkets and delicatessen-type restaurants. Cooked hams made from blends of domestic pork and US turkey thigh meats are substantially cheaper than all-pork cooked hams.

Most whole turkey demand occurs during the Christmas season. The average bird weight when marketed is on average 15 pounds. Industry sources report that consumption patterns for turkey and turkey products are changing as consumers become increasingly health conscious with food habits.

Trade

The most important poultry meat imported by Mexico is CLQ´s to be sold in supermarkets. While the processing industry imports most mechanically deboned poultry, chicken and turkey (MDC & MDT), and poultry cuts as inputs for the domestic sausage and cold-cut industries. Large meat processors prefer fresh, refrigerated product, while small and medium processors tend to use frozen product.

The top three products imported by Mexico are fresh or chilled mechanically deboned chicken meat, fresh and chilled turkey parts, and frozen chicken leg quarters although imports of poultry products are increasingly diversified. Recently, imports of whole chickens principally for the self-service supermarkets have occurred. Supermarkets import a higher quantity of cuts when prices in the US are cheaper than in the domestic market (i.e., thighs, leg quarters and drumsticks [1] ).

The United States is the main supplier of imports to Mexico – approximately 90 per cent. Currently, the only other competitor in this market is Chile with approximately 10 per cent of imports.

On the other hand, Mexico exported $1.7 million dollars of poultry and poultry products to the world in 2008. Primary destinations were countries within Africa. The leading exported product is table eggs, which accounted for 69 per cent of all exports.

[1] Source: Georgia Department of Agriculture, prices compared from Sept 2008 to January 2009 http://agr.georgia.gov/00article/0,2086,38902732_0_40311595,00.html

Chicken meat

Imports of chicken cuts, mainly leg quarters, and mechanically separated chicken for MY 2010 are forecast to increase due to rising consumer demand and the demand from the processing industry but at a slower pace. In spite of the economic crisis, imports for 2009 will increase approximately 12 per cent but the composition of imports is changing. Whole chicken (fresh and frozen) imports have increased about 50 per cent while imports of MDC have declined. Imports are affected primarily by the exchange rate but Mexican processors are seeking and sourcing products domestically.

Imports of chicken meat for MY 2008 were revised to reflect official data.

At the beginning of year, the meat processing industry expected to import more raw materials such as mechanically separated chicken and turkey meat due to higher demand for cheaper meat inputs for the production of such items as mortadella, sausage, pastry or hams. However, a volatile exchange rate has reduced the importation of MDC from the United States but, not from Chile. Chile’s exports of MDC increased 120 per cent for the first five months of 2009 compared to the same period of 2008.

US exports continue to be restricted by import bans imposed by Mexico for sanitary conditions. This year, Mexico has imposed import bans for poultry and poultry products produced within the county of Edmonson in Kentucky, the counties of Giles and Lincoln in Tennessee and the county of Meeker in Minnesota due to an outbreak of low-pathogenic avian influenza (LPAI). (See GAIN reports MX9022 and MX9034).

Exports of Mexican chicken meat have increased slowly. Furthermore, 2008 estimates have been revised to reflect official data. Exports consist of value added products such as ready-to-eat products (RTE) produced from imported US raw materials.

Turkey meat

MY 2010 turkey meat imports are forecast to increase to 206,000 MT, only a 0.5 per cent increase, as demand for turkey cuts for further processing is expected to grow. A similar small increase is expected for 2009 due to higher international prices as a result of the volatile exchange rate.

The MY 2008 import estimate was revised downward based on final trade data.

The United States is the main supplier of turkey meat in Mexico however, Chile’s presence in the poultry market is expected to continue growing as Mexican importers seek to diversify suppliers, but only if no sanitary outbreak occur in Chile. Chilean products are competitively priced and suitable for processors who are willing to work with frozen product. Chilean poultry imports are duty free under the Mexico-Chile Free Trade Agreement.

In 2008, turkey meat imports were 66 per cent fresh parts, 26 per cent frozen parts, five per cent whole, and two per cent smoked.

Policy

Chicken and turkey meat

The 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 US National Poultry Improvement Plan (NPIP). SAGARPA and USDA agreed that the NPIP would be deemed as an equivalent programme to the regulation NOM-044-ZOO-1995 “National Campaign against Avian Influenza” that was modified and implemented on 14 August 2006. However, on 17 August 2009, SAGARPA informed USDA the NPIP would not meet the AI testing requirements for breaking eggs. Currently, USDA and SAGARPA are holding technical discussions to address the concerns of SAGARPA regarding the possible AI risk this product presents to Mexico.

Domestic poultry producers have faced difficult times with the increased grain prices, the peso devaluation and most recently, the economic crisis. Domestic producers have been looking for alternative financing options to avoid or minimise the effects of the markets on their revenue streams. In addition, domestic producers continue to invest in improving sanitary standards within their flocks and conditions within slaughtering facilities. Furthermore, efforts continue to obtain USDA recognition of disease-free areas within Mexico.

SAGARPA is developing a programme of modernisation of import inspection procedures at the borders, which could be published or implemented on 1 November 2009. These new procedures are not only a part of a plan to modernize inspection procedure but also an effort to harmonise import procedures with NAFTA partners.

In addition, COFEMER (counterpart to the US Office of Management and Budget) is reviewing new proposed regulations to the Animal Health Law. By the end of the year a draft proposal of these regulations may be published in the Federal Register. These regulations will outline the import procedures for import inspections by SAGARPA at the border for imported meat and meat products.

Recently, actions by the Secretariat of Health, specifically COFEPRIS [1], have indicated existence of a turf war over food safety within the Mexican Government. COFEPRIS has raised concerns with the importation of eggs, citing its authority within the import requirements of NOM-159-SSA-1996. Its concerns dealt with the cold chain processes for these imported eggs.

[1] COFEPRIS: Federal Commission for Sanitary Risk Protection. US equivalent is the Food and Drug Administration.

Marketing

Chicken and turkey meat

Most poultry meat in Mexico is sold as whole birds, although sales of chilled or refrigerated poultry cuts are continuing to increase, principally through supermarkets. The share of supermarket sales is expected to grow as consumers increasingly accept poultry cuts and other RTE poultry products.

Around 75 per cent of Mexican turkey production is marketed during the Christmas season as whole turkeys, and approximately 25 per cent is sold as cut-up and further processed turkey meat products. The USA Poultry & Egg Export Council (USAPEEC), along with local turkey producers and meat processors, has sponsored generic marketing campaigns to increase overall consumption of selected turkey products and processed products in Mexico.

USAPEEC’s Mexico office has actively promoted poultry products in various large retail and food service exhibitions within USDA/Agricultural Trade Show Pavilions like Antad and Abastur. For cooked and processed poultry products, USAPEEC has also participated in Expohotel and Expo-Agroalimentaria. USAPEEC will continue to support marketing strategies within the NAFTA Egg and Poultry Partnership (NEPP), which promotes the exchange of information and technical expertise between both the US and Mexican poultry industries. Last year, USAPEEC and UNA collaborated on a project to promote hard-boiled eggs as a snack. The development and testing of the marketing slogan “snack of the future” have yielded beneficial results. USAPEEC and UNA continue to develop a positioning strategy for the snack and intent to compete with high-carbohydrate and fatty-food products.

UNA will continue domestic investments in marketing and promotion of poultry meat. UNA plans to develop strategies in a collaborative effort with the National Poultry Institute (NPI) to educate consumers on the benefits of poultry, eggs and poultry products.

Further Reading

- You can view the full report by clicking here.

December 2009