Market Information
Latin America and Caribbean

Overview of the Mexican Pork Sector

Prepared by Agriculture Section - Alejandro Ruiz, Commercial Officer
Canadian Embassy, Mexico

Production

On 2001, the Mexican pork meat production reached 1,143,580 metric tons, which represented an increase of 11% from the 2000 production. The pork meat production represents about 25% of the total meat production in Mexico.

The total value of pork production for 2001 (25,185.3 million Mexican pesos), showed an increase of 21% from the value registered on 2000, which is explained by the increase of 9% on the average domestic prices between these years.

The increase in production is partly explained by the investments made on the pork industry, an increasing use of genetic improvement that has elevated productivity levels and further integration of swine producer associations in slaughtering and marketing activities.

Source: Mexican Ministry of Agriculture (SAGARPA).

For 2002, pork meat production is forecast to increase over the 2001 year's figure, reflecting production capacity and production increases of largely vertically integrated companies. This expansion is expected to offset the departure of many medium and small sized farms which are not competitive under the current cost/price structure of the industry.

On 2001 a total of 15 million swine were slaughtered, which represented an increase of 12.3% from the total slaughters on 2000. 73% of the slaughters were made on private plants and the rest 27% on specialized TIF plants.

Considering the increase of pork meat production, the total demand of coarse grains from the Mexican pork sector during 2001 was 4.5 million tons, which represented an increase of 10% from the 2000 demand.

Sanitary Issues

During 2001, the national campaigns against classical swine fever and Aujezky disease were maintained into force. In the case of classical swine fever, only were detected 8 positive cases during 2001, which affected 700 swine. The National status reported during 2001 specifies that 14 States were free of the disease, 11 States were in the eradication stage and 8 States in the control stage.

Regarding the Aujezky disease, 89 positive cases were found during 2001, which affected about 12,842 swine.

Consumption

The Mexican consumption of meat has increased in the last years because of the strengthening of the purchase power of some sectors of the population and lower market prices. However, on pork meat, Mexico has a relatively low per capita consumption of 10 kgs. It is expected that per capita consumption of pork will increase slightly in the short term as pork becomes more competitive in price vis-à-vis beef and poultry.

It is estimated that 73.6% of the total domestic consumption during 2001 was supplied by domestic producers and 26.4% was imported.

Pork carcass wholesalers in Mexico City claim that the large swine producers increased price for live swine. During 2001 domestic swine were priced at 1.36 US$/Kg., while imported swine were priced at 1.38 US$/Kg.

Trade

U.S. and Canada pure-breeding swine have already duty free access on the Mexican market under NAFTA. Canada is the main supplier of these animals to Mexico. During 2001, Mexico imported 24,816 swine heads with a value of 5.9 million dollars from Canada, which according to the volume represented an increase of 178% from the 2000 figure.

 * Includes tariff line: 0103.1001.
Source: Mexican Secretariat of Economy.

* Includes tariff line: 0103.1001.
Source: Mexican Secretariat of Economy.

Under NAFTA, Mexican imports of swine for slaughter, pork meat and pig fat are subject to special safeguards, so a minimum TRQ is applied with a preferential tariff and when it is filled up, the safeguard is activated and a higher tariff is applied. These safeguards will be completely eliminated on 2003, granting duty free access without quantity restrictions to these products.

On 2001, the minimum TRQ applied to imports of swine for slaughter from the U.S. was 456,529 heads and 1,407 heads for imports from Canada. The U.S. is the main supplier of these products to Mexico. However, the antidumping duties slapped by Mexico to U.S. imports of these products, and Mexican regulations requiring all U.S. hogs to be slaughtered at TIF plants due to the porcine respiratory and reproductive syndrome (PRRS), have affected the U.S. market access.

It is important to remark that Canada does not have a significant share on the Mexican market for this product.

Includes tariff lines: 0103.9199 and 0103.9299.
Source: Mexican Secretariat of Economy.

In the case of pork meat (fresh, chilled and frozen), the total TRQ applied to the U.S. for 2001 was 77,974 metric tons and 8,443 metric tons for Canada. On 2001, both Canada and the U.S. surpassed their TRQ's.

During 2001, the U.S. supplied about 85% of the total Mexican pork imports. They surpassed their minimum TRQ and exported about 175,762 metric tons of pork with a value of 254.8 million US$ to the Mexican market.

Canada also surpassed its minimum TRQ and exported 25,894 metric tons of pork with a value of 36 million US$ to the Mexican market. However, Canadian exports of pork to Mexico during 2001 were 3.8% lower than 2000 and its share reduced from 13.4% to 12.5%.

The main Canadian varieties of pork exported to Mexico during 2001 were fresh or chilled hams, shoulders and cuts there of, which represented about 56.4% of their total pork exports and frozen pork which represented about 18.4% of these group.

* Includes tariff lines: 0203.1101, 0203.1201, 0203.199, 0203.2101, 0203.2201 and 0203.2999.
Source: Mexican Secretariat of Economy.

* Includes tariff lines: 0203.1101, 0203.1201, 0203.199, 0203.2101, 0203.2201 and 0203.2999.
Source: Mexican Secretariat of Economy.

Regarding salted pork, the minimum TRQ applied by Mexico to the U.S. for 2001 was 6,272 metric tons and 704 metric tons to Canada. The U.S. share on the Mexican market for these products reduced on 2001, while the Canadian share increased from 8.7% on 2000 to 20.6% on 2001.

Total Mexican imports of Canadian salted pork during 2001 amounted 2,563 metric tons with a value of 3.8 million US$, which represented an increase of about 300% from the 2000 figure.

 * Includes tariff lines: 0210.1101, 0210.1201 and 0210.1999.
Source: Mexican Secretariat of Economy.

 * Includes tariff lines: 0210.1101, 0210.1201 and 0210.1999.
Source: Mexican Secretariat of Economy.

For pig fat, the 2001 minimum TRQ applied to imports from the U.S. was 43,046 metric tons and 1,407 metric tons for Canada. The U.S concentrates more than 90% of the total Mexican imports of this product while Canada has a share of about 3%.

* Includes tariff line: 0209.0099
Source: Mexican Secretariat of Economy.

 * Includes tariff line: 0209.0099
Source: Mexican Secretariat of Economy.

Domestic producers are still concerned about large lower priced imports of U.S. pork. They claim that imports of pork products severely hurt the industry. In addition, producers allege that high imports of mechanically deboned poultry meat have displaced the use of domestic pork in manufacturing hams and sausage products.

As the year 2003 approaches ever closer, pressure from pork producer groups to impose protectionist policies or non-tariff barriers is likely to increase. There are no signs that the government of Mexico, specifically the Secretariats of Economy and Agriculture are preparing local producers for the elimination of tariffs and TRQ's under NAFTA.

Regarding exports, during 2001 total Mexican pork exports amounted 36,740 metric tons with a value of 144.2 million US$ which represented an increase of 15% from the 2000 figures. As a matter of fact, this is the highest figure reported in all Mexican pork history.

Japan is the main market for the Mexican pork, followed by countries of Central America, Hong Kong, South Korea and Chile, among others.

Policy

Industry contacts anticipate that the National Swine Commission (CONAPOR) and the Mexican Swine Council (CMP) will combine their political influences when lobbying Mexican Government authorities to continue to push for managed trade for swine and pork imports from the U.S. and Canada.

On April, 2002, former President of the National Agricultural Council (most important national agricultural organization), Mr. Jesús Vizcarraga divulged the initiative called (PA3) Trilateral Agricultural Policy.

The initiative justifies the need for a trilateral cooperation framework to promote farm development in Mexico by stating that Mexico has been consolidated as one of the main farm commercial partners for US and Canada.

There is recognition about tariff elimination for swine sector in 2003, however the initiative do not challenge NAFTA provisions since they were set up according to the Uruguay Round Scheme. The main objective is to develop a strategy that avoids dumping demands and panels of unnecessary controversies.

Although, this initiative is not an official position, it reflects an appeal for cooperation and not for confrontation.