Executive Summary

Pork production for 2010 is revised downward from previous estimates, but still higher than 2009. Factors influencing this revision are the international economic crisis, H1N1 outbreaks, and the Mexican Government’s increase in consumer taxes. The Mexican pork sector is restricted in the level of expansion which can occur to meet the increasing demand. Pork imports for 2010 and 2009 are revised 8.9 and 8.3 per cent higher, respectively, reflecting the increased domestic demand. In 2010, pork exports are expected to recover, although the recovery is lower than previously estimated. This is in part due to the delay in obtaining sanitary agreements with China to start exporting to that market. Furthermore, Mexico’s efforts to open new export markets are restrained due to the lack of USDA recognition of areas free of Classical swine fever (CSF) in Mexico.

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

Production

Swine production estimates are unchanged. For 2010, higher slaughter is forecast as a result of a Mexican government support programme encouraging better slaughtering techniques. The 2009 slaughter figure is being revised up as a result of consumption recovery which resulted from the lower prices recorded after H1N1 outbreaks. Slaughtering for 2008 is revised up 2.6 per cent to reflect new official data. Loss figures are adjusted for 2010, 2009 and 2008 due, in part, to better genetics within the Mexican sector, herd management and improved production techniques.

Swine inventory data are revised downward for 2010, 2009 and 2008 due to higher slaughter and lower loss.

The 2010 pork production forecast is revised down to 1,166 TMT, which is slightly higher than the 2009 new estimate (1,162 TMT) and reflects official forecasts. Despite many producers having been impacted by the H1N1 outbreaks, official 2009 production data show an increase of 0.1 per cent over the 2008 level. Production for 2008 is unchanged.

Consumption

In spite of domestic fiscal policy changes, which have increased the cost of gasoline, transportation, energy, and taxes, the consumption of beef and pork is expected to increase in 2010. Moreover, this increase is higher than previously estimated.

Total consumption for 2010 is revised up 2.6 per cent. Mexico’s pork consumption is expected to continue growing in 2010, fuelled by an increased demand by the processing industry and strong demand in the restaurant and hotel sector.

In spite of the international economic crisis, H1N1 outbreaks and low consumer perception of pork meat, pork consumption for 2009 is revised 3.4 per cent higher. This increase is due to lower pork prices and positive results from a media campaign which occurred after the H1N1 outbreaks.

Mexico’s meat processors will continue to import US pork variety meats because of the lack of domestic production. The increasing availability of pork cuts and variety meats (hams, sausages, etc) in Mexico’s growing retail industry continues to support consumption. Furthermore, the economic recovery should support the purchases of value-added products by middle and upper-income consumers if prices don’t escalate.

Trade

Live swine imports for 2010 and 2009 are revised down 33.3 and 30 per cent, respectively, from previous estimates. Historically, imports were of live swine weighing 50 kilograms or more. However, recent imports are principally hogs classified as pure breed race (HS: 01031001) hogs. Furthermore, importers have switched from live animals to raw or finished pork products.

Live swine imports for 2010 and 2009 are revised down 33.3 and 30 per cent, respectively, from previous estimates. Historically, imports were of live swine weighing 50 kilograms or more. However, recent imports are principally hogs classified as pure breed race (HS: 01031001) hogs. Furthermore, importers have switched from live animals to raw or finished pork products.

The recovery of Mexican pork exports for 2010 will be lower than expected. The figure is 10.5 per cent lower than previously reported due to the lack of USDA recognition of areas free of CSF in Mexico. For 2009, total pork export figure is revised 12.8 per cent lower due to a higher impact from the H1N1 outbreak and a lack of international pork demand. Mexican pork exports to Japan recorded a decline of 31.4 per cent to 38,038 MT in 2009 based on figures from January-November.

Policy

The Ministry of Agriculture (SAGARPA) continues to seek USDA recognition for Classical swine fever (CSF) disease-free areas in Mexico. USDA/APHIS has provided technical support and continues to do so in order to complete the required regulatory process as outlined in Title 9 Part 92 of the Code of Federal Regulations. Despite the Mexican pork sector’s understanding of the US regulatory process for obtaining disease-free area recognition, the bureaucratic process is trying the nerves of the sector. For this reason, USDA, US Meat Export Federation (USMEF) and US Poultry and Egg Export Council (USAPEEC) have begun collaborating to assist SAGARPA in fulfilling the US requirements to obtain recognition of CSF disease-free areas.

SAGARPA announced on 29 January 2008, that the import of frozen meat and meat products in ‘combos’ will be prohibited. Combos are large, plastic-lined, palletized cardboard boxes of the same product from the same establishment. Mexico delayed implementation of 100 per cent intrusive sampling of combos at the border, until 15 May 2010.

Due to the volume of trade using combos, a legal requirement for 100 per cent organoleptic inspection, microbial testing and periodic discoveries of non-agricultural contraband in combos (e.g., smuggled shoes and firearms), Mexican authorities have struggled to develop a risk-based inspection system that will not impede trade. Uncertainty surrounding the nature of a new inspection system as well as its date of implementation arouses concerns among meat traders.

For 2010, Mexico’s Congress authorized a tax increase thus reducing expenditures for food, especially among low-income families. Beef and pork product purchases could be affected by these new taxes. Furthermore, the cost of production for meats within Mexico could increase due to higher costs of gasoline, transportation, and other energy inputs.

For 2010, the Government of Mexico (GOM) has created a new livestock programme called ‘Ganaderia por Contrato’ (Livestock Contract) with a budget of approximately 500 million pesos (US$ 39.3 million) ^[1]. This programme includes support for calf production to supple feed lots.

The GOM share risk programme ^[2] budget will increase 68 per cent, to 1,654 million pesos (MXP; US$ 130 million) in 2010, as compared to the 2009 level. One programme of note is PROVAR, which supports the creation of value-added agricultural products (including red meat) and is budgeted at MXP400 million (US$ 31.45 million) for 2010.

During 2010, the GOM’s ‘Adquisicion de Activos productivos’ (Acquisition of performing assets) programme established strategies to improve the competitiveness of the beef and pork meat sectors. Currently, these strategies are funded at MXP600 million (US$ 47.17 million) for beef and MXP120 million (US$ 9.43 million) for pork.

^[1] Exchange rate: MXP12.72 per dollar on 4 March 2010.
^[2] This resource is managed by The Shared Risk Trust (FIRCO), a parastatal entity.

Marketing

The Mexican Congress approved a total budget of MXP250 million (US$18.5 million) for trade shows and export promotion of agricultural products. Red meat producers could obtain funding to promote exports of Mexican red meat products through out the world. In addition, the Government of Mexico has established a government loan programme to promote the production of value-added products.

US Meat Export Federation (USMEF), a non-profit, industry-sponsored trade organization dedicated to increasing exports of US red meat products in all foreign markets, is very active in Mexico. Within Mexico, USMEF has actively promoted red meat products in various large retail and food service exhibitions within USDA/Agricultural Trade Show Pavilions. In addition, USMEF conducts programmes to increase the number of US meat products within the Mexican market.

The Agricultural Trade Office (ATO) in Mexico will participate in the following trade shows to promote US exports: SAGARPA (13-14 April 2010), Puerto Vallarta (21-24 April 2010), Alimentaria (1-3 June 2010), Expohotel 2010 (16-18 June 2010) and ABASTUR 2010 (3-5 August 2010).

Further Reading

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March 2010