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Global Outlook Symposium Mexico. Chad R. Russell Regional Director October 29, 2007. U.S. Beef Exports- Mexico. Thousand MT. Source: USDA and USMEF Forecasts; BVM= Beef Variety Meats. U.S. Pork Exports-Mexico. Thousand MT. Source: USDA and USMEF Forecasts; PVM= Pork Variety Meats.

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global outlook symposium mexico

Global Outlook SymposiumMexico

Chad R. Russell

Regional Director

October 29, 2007

u s beef exports mexico
U.S. Beef Exports- Mexico

Thousand MT

Source: USDA and USMEF Forecasts; BVM= Beef Variety Meats

u s pork exports mexico
U.S. Pork Exports-Mexico

Thousand MT

Source: USDA and USMEF Forecasts; PVM= Pork Variety Meats

key drivers for exports to mexico
Key Drivers for Exports to Mexico
  • Market access
  • Competitor developments
  • Domestic production
  • Political situation
  • Economic situation
  • Consumer trends
market access
Market Access
  • General, both beef & pork
    • NOM-30: Mexico’s principal meat regulation is under review
      • Zero tolerance for Salmonella
      • Zero tolerance for bone fragments in boneless meat
    • New Animal Health Law: Legislation recently passed by Mexico’s Congress
      • Secretariat of Health will “coordinate” approvals of meat plants
      • Provisions for traceability
      • Provisions for animal welfare (GPP)
    • Periodically more stringent enforcement of import requirements
market access1
Market Access
  • Beef
    • Six Prohibited Products: beef feet, weasand meat, sweetbread, small intestine, ground beef, and head meat
    • Anti-dumping Duties: On May 4th NAFTA panel lets stand anti-dumping duties until April 2011
  • Pork
    • Local producer groups continue to pressure their government, especially Congress, to impede the importation of pork
    • To date, the Executive Branch has rejected pleas for a safeguard and anti-dumping duties; however, Congress largely remains supportive of producer concerns
competitor developments
Competitor Developments
  • U.S. import market shares for beef and pork are 83% and 88%, respectively
  • Increased sharply over the past five years
  • U.S. gains have been Canada’s losses
  • Uruguay recently approved to export beef to Mexico
  • Mexico’s self sufficiency for beef has changed little since 1992
  • Conversely, Mexico’s self sufficiency for pork has deteriorated 13 percentage points since 1992
  • However, Mexico’s pork industry is consolidating, modernizing, and becoming more vertically integrated
per capita meat consumption
Per Capita Meat Consumption

Kilograms

per year

Source: SAGARPA Statistics.

domestic production
Domestic Production
  • Beef
    • Production increased 2.3% per year from 1990 to 2005, but decelerated to 2% the last five years
    • Limited investment in the sector
    • Beef production largely dependent on precipitation in northern Mexico
    • Cattle exports forecast down over 8% for 2008
    • Price elasticity of supply is inelastic
    • $110 peso per head subsidy for slaughter
    • Rising grain costs a problem for many feedlots
    • Congress considering subsidy for users of grain
domestic production1
Domestic Production
  • Pork
    • Production increased 2.5% per year from 1990 to 2005, but decelerated to 1.4% the last five years
    • Increasing investment in sector
    • Larger operators moving from hog producers to meat producers
    • Price elasticity of supply for pork is three times greater than for beef
    • $100 peso per head subsidy for slaughter
    • Rising grain costs are accelerating transition to more efficient, integrated production
    • Congress considering subsidy for users of grain
political situation
Political Situation
  • Current government solidly pro trade and market oriented
  • To date, has not supported efforts of producer groups to impede imports of U.S. red meats
  • Many congressmen sensitive to plight of local producers and continue to pressure the executive branch to take action
  • Next presidential election in about five years
economic situation
Economic Situation

Source: Bank of Mexico and IMF

consumer trends
Consumer Trends
  • General
    • Over 90% of retail consumers are price driven
    • Over 60% of consumers prefer to buy meats at traditional markets or local butcher shops
    • Consumers becoming aware of brands and their benefits, but less than 4% of products are branded
consumer trends1
Consumer Trends
  • U.S. Beef
    • Appreciated for its tenderness, color, and ease of preparation
    • Consumer perceptions about fat content represent the greatest constraint to non purchase
    • Many consumers perceive U.S. beef as not fresh
  • U.S. Pork
    • Recognized for its convenience and ease of preparation
    • Many consumers perceive pork, independent of origin, as not being clean or safe to eat
    • Mexican pork is more likely to be associated with positive attributes (delicious, natural, nutritious, and fresh)
summary
Summary
  • Excellent market access compared to other foreign markets
  • Price sensitive market
  • Poultry has become the preferred meat, primarily at the expense of beef but to a lesser extent pork.
  • Expect increased competition for a more efficient and price competitive Mexican pork industry in the next 2-3 years
  • Conversely, the U.S. beef industry will not anytime soon face a more efficient, competitive Mexican beef sector
  • However, the threats are the growing popularity of poultry meat and over the longer term the prospect of more competition from South American origins and the Mexican pork industry
summary1
Summary
  • Mexican consumers are becoming more aware of the importance of a healthy diet but often are not well informed about the role of red meat in such a diet
  • Mexico will remain a large, growing market for U.S. beef and pork for many more years because of its
    • unrealized economic potential
    • geographic proximity to the U.S.
    • population growth
    • expanding modern supermarket sector
    • popularity as a tourist destination
    • limitations to self sufficiency in the production of red meats
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