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Mexico: Poultry and Products Semi-Annual Report 2011

by 5m Editor
18 March 2011, at 12:00am

Mexico’s 2011 broiler meat production forecast is unchanged as high and volatile feed prices continue to limit growth, according to the latest GAIN Report from the USDA Foreign Agricultural Service. The consumption forecast is revised slightly higher as consumer purchasing power continues to recover.

Executive Summary

2011 Broiler Meat Overview

The production forecast is unchanged as higher feed prices and grain price volatility continue to limit growth.

Consumption is revised slightly higher as consumer purchasing power continues to recover. Demand by lower-income consumers is expected to continue increasing. However, the growing Mexican population and a shift in the preferences of middle-income consumers from chicken to beef are limiting per-capita consumption growth.

The import forecast is revised upward five per cent to 580,000 metric tons (MT), maintaining previous growth expectations following a stronger than expected 2010 import figure. Consumer demand remains robust particularly due to lower international prices. Demand for mechanically deboned meat by the sausage processors also remains hearty.

The export forecast is revised 4,000 MT higher, reflecting increased shipments to Asian markets.

The National Service of Health, Food Safety, and Food Quality (SENASICA) launched a new system to review the zoo-sanitary import requirement sheets (HRZs) on line and removed the need to obtain the HRZ in person at a SENASICA office. In addition, SENASICA is working to reduce the number of HRZ’s. At this time, it is unclear how this new system will affect the trade in poultry and poultry products.

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

Production

The 2011 broiler-production forecast is unchanged as higher feed prices and grain price volatility continue to limit growth. Furthermore, recent frost damage during the first few days of February in northern Mexico could negatively affect domestic feed purchases. For more information, consult the previous GAIN report MX1012).

Price volatility in grains will affect only a part of broiler production, principally medium and small producers who are less inclined to use risk management practices. This will hinder additional production growth, which is supported by a better economic situation and stronger consumer purchasing power.

For the poultry sector, 40 per cent of feed grains is sourced domestically while the remaining 60 per cent is imported. According to some producers, about 73 per cent of the total demand for feed grains is currently covered using risk management tools generally mitigating the impact of higher grain prices.

Producers have expressed their intention to avoid an unexpectedly strong increase in broiler production costs, as occurred with record high grain prices in 2007 and 2008. Thus for 2011, they are hedging against such price risks using the government’s programme, Agricultura por Contrato, under which the price-risk volatility for domestic corn and sorghum is covered.

Consumption

Consumption for 2011 is revised marginally higher as expectations for consumer purchasing power recover are unchanged. Demand by lower-income consumers is expected to continue to increase.

According to INEGI, the average Mexican consumer spends 34 per cent of income on food, and from that, 24 per cent is used for purchasing all kinds of meat (of which 28 per cent for poultry meat and 15 per cent for process meats such as sausage, hams, chorizo, etc.). Thus small positive changes in disposable income potentially raise and/or alter meat consumption.

Consumers continue to prefer fresh whole chickens compared to chicken cuts, and supermarkets continue displaying imported poultry meat, including CLQs, along with domestically produced products. In addition, Mexican consumers avoid consuming frozen or long-time chilled chicken products; for the Mexican consumer, fresh products are associated with quality.

During the second half of 2010, consumer prices for chicken leg quarters (CLQs) and whole chickens were slightly higher compared to the prices during the first half of 2010. The CLQs average price for 2010 was 24.24 pesos (MXP) per kilo (US$1.92/kg), and the whole broiler average price for 2010 was MXP24.95 per kilo (US$1.98 /kg).

1 INEGI: Instituto Nacional de Estadística y Geografia (National Institution for Statistics and Geography).


Figure 1. Mexico: Monthly wholesale CLQ domestic price
2006-2010


Figure 2. Mexico: Monthly consumer whole broiler price
2006-2010

Trade

Imports

The 2011 import forecast is revised upward five per cent to 580,000MT, maintaining previous growth expectations, but higher because of the stronger-than-expected 2010 imports. Consumer demand remains robust particularly due to lower international prices. Demand for mechanically deboned meat by the sausage industry also remains hearty.

According to industry association sources, 90 per cent of the raw material for producing sausage, hams, chorizo and other products comes from the United States. The processing sector is expected to continue increasing production in 2011; thus, potential for increased imports of US mechanically deboned meat exists.

Concerning sanitary restrictions, in September 2010, the Mexican government lifted the import ban imposed on live birds, poultry products and by-products, and eggs from the counties of Edmonton, Kentucky, Giles and Lincoln, Tennessee; and Tarrant, Texas (for more information consult the previous GAIN report MX0065).

Exports

The 2011 export forecast is revised upward by 4,000MT reflecting an anticipated increase in shipments to Asian markets.

The 2011 Mexican congressionally approved budget includes MXP400 million (US$31.7 million) for export promotion of agricultural products. As the Mexican poultry sector continues to focus on exports, a portion of this funding could be used for foreign market development.

Policy

New HRZ system

On 13 December 2010, SENASICA launched a new on-line system for sanitary import requirements (HRZ by its acronym in Spanish). This web-site allows importers and exporters to review Mexican import requirements on line (HRZ system) prior to exporting. Furthermore, the system removed the need to obtain the HRZ in person at a SENASICA office and present it with the exported shipment. Since this new system was announced (13 October 2010), SENASICA has continued its efforts to reduce the number of HRZs for all imported products. USDA-Mexico is working very closely with SENASICA to maintain the flow of trade without disruptions. At this time, it is unclear how this new system will affect the trade in poultry and poultry products. (More information can be found in GAIN report MX0090).

Anti-dumping investigation of US CLQs

On 8 February 2011, the Secretariat of Economy (SE) published in the Diario Oficial (Mexican Federal Register) a notice announcing an anti-dumping investigation of US fresh, chilled or frozen CLQs (HS# 0207.13.03 and 0207.14.04) exported to Mexico. The reference period is from 1 January 2007 to 30 September 2010, with the investigation focusing on the period from 1 October 2009 to 30 September 2010. The petitioners claim US export chicken prices are below the US cost of production. Since this investigation was initiated without preliminary import duties, the significance of the antidumping case is not yet known. For further information, consult GAIN report MX1009.

Marketing

The Agricultural Trade Offices (ATO) in Mexico will participate in the following trade shows to promote US exports: ANTAD 2011 (9-11 March), Alimentaria Show (31 May to 2 June), Expohotel 2011 (15 to 17 June) and ABASTUR 2011 (20 to 22 September). 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
atomexico@fas.usda.gov
www.mexico-usda.com
Garth Thorburn, Director

Further Reading

- You can view the full report by clicking here.

March 2011