Report Highlights

Imports of pork and beef are expected to grow modestly in CY 2007 as demand for meat continues to rise, particularly in urban areas and among middle and upper income consumers. Total consumption of beef and pork are forecast higher in CY 2007.

Executive Summary

Live Hogs & Pork: Post’s 2007 forecast figures for swine and pork remain unchanged from the previous report (MX6068). Total hog inventories are forecast higher in 2007, supported by solid demand. Hog slaughter is forecast to increase in 2007, partially spurred by higher feed costs. Slaughter could increase further in 2007 if feed prices remain high, leading producers to shorten feeding time to reduce costs. Mexico’s imports of U.S. hogs are forecast to reach 225,000 head in 2007, mostly for slaughter. Pork production is forecast higher in 2007, along with consumption and imports. Mexico’s pork exports are forecast to continue growing in 2007 as exporters take advantage of the Japan-Mexico free trade agreement and other opportunities in Asia.

Production

The 2007 pork production forecast remains at 1.25 MMT, which is slightly higher than the 2006 estimate. Although many producers have been impacted by higher feed costs, hog numbers are expected to continue growing in 2007. During CY 2006, improved productivity from larger vertically integrated operations brought swine inventories up from the previous year. Mexico’s larger vertically integrated domestic swine producers grew in 2006. Small, backyard hog production however, is still significant as about one-third of Mexico’s pork production comes from farms with less than 20 animals. Smaller commercial enterprises (200 to 500 sows) account for more than 25 percent of total Mexican production. These producers are substantially impacted by rising corn prices and are the most vocal in pushing the Mexican government for assistance and restrictions on imports. The larger and more technically advanced producers (over 500 sows) represent over 40 percent of total production.

Consumption

Mexico’s pork consumption is expected to continue growing in 2007, fueled by increasing purchasing power among middle and upper classes, and strong demand in the restaurant and hotel industries. In the past, many Mexican consumers believed that pork meat was unhealthy and unsanitary. However, this “myth” has eroded in recent years further adding to the growth in consumption as both government and industry have worked together to promote pork as a safe and healthy product. The increasing availability of pork cuts and variety meats (hams, sausages, etc) in Mexico’s growing retail industry has also helped to increase consumption. Additionally, Government support programs for the slaughter and processing of hogs in federally inspected slaughterhouses (TIF) have spurred an increase in consumption of pork meat and processed meat such as hams.

Mexico’s sausage companies continue to use imported U.S. pork variety meats due to attractive prices and high quality. Domestically produced sausages containing imported ingredients, as well as imported sausage, continue to gain market niches in Mexico, particularly among mid and upper-income consumers.

Trade

Pork imports for 2007 are forecast to remain unchanged at 460,000 MT, which is slightly higher than the 2006 estimate. Mexico remains a strong market for U.S. pork variety meats, lard, and greases. Given Mexico’s population growth and relatively low per capita consumption, demand for U.S. hogs and pork products is expected to increase in the coming years.

Through December 2006, total U.S. hog exports to Mexico for CY 2006 were 196,391 head, 8.32 percent higher than imports for the same period in CY 2005, as Mexican producers and processors took advantage of competitive prices in the United States.

Mexico’s pork exports are forecast higher in 2007 at 70,000 MT. With the exception of high quality cuts being exported to Asian markets, overall export levels will remain relatively modest due to animal health constraints and relatively high prices for Mexican pork.

Policy

Mexico’s pork industry is likely to maintain pressure on the Mexican Government to implement policies designed to reduce imports of pork and mechanically de-boned poultry meat (MDM) and turkey parts. Swine producers claim that rising MDM and turkey parts imports along with pork imports displace utilization of domestic pork.

Marketing

Pork in the retail sector tends to be purchased by consumers in traditional Mexican markets where most butcher shops are located. However, consumers are increasingly buying meat products and special cuts at supermarkets that cater to consumers from the higher socioeconomic classes. Additionally, discount warehouse stores are making shopping at supermarkets more accessible to average consumers.

Further Information

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List of Articles in this series

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March 2007