Market Information
Latin America and Caribbean

Agri-Food News from Mexico

Canada - Mexico Flags

Issue No. 18

November 1, 2004 – January 31, 2005

Approved: Murray Pearson / Marcello DiFranco
Prepared: Alejandro Ruiz / Adriana Carrillo / Adriana Vega

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MARKET NEWS HIGHLIGHTS

The Mexican wood industry is exploring the possibility of importing wood from Canada
The Mexican market for cereal bars is growing due to the current trend towards healthy products
Sonora has replaced Jalisco as the largest producer of pork in Mexico
Soriana is planning to invest US$300 million in 2005 to expand its sales capacity
A gastronomic festival took place in Mexico to promote Canadian food products
Sinergia has already developed a suppliers’ base of around 300 companies
Gigante will keep operating in spite of the difficulties faced in previous years
Comercial Mexicana will open 22 new stores during 2005
The supermarkets and retailers associated to ANTAD reported record sales in October 2004
The Mexican government has launched a program to improve regional wholesale markets
The convenience store chain 7-Eleven will open 100 new stores in Mexico
Yoplait launches a new product to improve its share in Mexico’s yogurt market
Mexican imports of skim milk powder are expected to continue growing
Mexico is the 4th largest importer of wheat and most of its imports come from the U.S. and Canada
The sales of the Mexican beer industry are not growing as expected
Wal-Mart is planning to buy directly from Mexican agriculture producers
The franchise sector in Mexico grew 19% during 2004
Total wine sales in Mexico are estimated at US$60 million and are expected to continue growing
Mexican consumption of flour based products has been declining due to new fat-free products
Foreign wine producers are trying to take advantage of the evolving Mexican wine market
The annual consumption of juice in Mexico is estimated at 9 litres per capita
Instant noodles and other snacks are replacing beans and pulses in the Mexican market
The total sales of Wal-Mart Mexico reached an historic record during 2004
Mexican imports of food products are growing
Wal-Mart and Liverpool reinforce their position as leaders in the Mexican retail market

MARKET NEWS

THE MEXICAN WOOD INDUSTRY IS INTERESTED IN IMPORTING WOOD FROM CANADA

The prices of forestry products have been increasing between 20 and 25 percent in 2004 because of a shortage of wood that goes beyond 60 percent of the demand in the Mexican market. The Mexican wood industry is trying to find options to improve the domestic production of wood and is exploring the possibility of importing wood from Canada to satisfy the domestic demand. Another factor that has affected wood prices is the decrease in sales of the Mexican wood industry during 2004 (the strongest fall in sales over the last ten years). Mr. Oscar Ramirez Figueroa, President of the West Sector of the Wood Industry National Chamber, estimated that during the first months of 2005, the State of Jalisco will be importing considerable wood quantities from Canada. (Source: Milenio, October 28, 2004)

THE MEXICAN MARKET FOR CEREAL BARS IS GROWING

The Mexican market for cereal bars reached US$95 million in 2003, which represents a 110% increase from 2002. Kellogg's concentrates 60% of this market and competes with General Mills and Bimbo, which are strongly fighting for a position in the Mexican Market. General Mills has introduced to the market new presentation of the Nature Valley bar, with the purpose of increasing sales by 20% as compared to 2003. Bimbo competes with Nutri Grain and Silueta and has won a 33% market share on the low calories bar segment. José Manuel Gonzalez, Marketing director of Bimbo indicated that given the current trend in the Mexican market towards healthier products, the company is spending US$1 million in an advertising campaign to inform consumers that new Bimbo products do not help to loose weight, but instead they are fat-and sugar free. (Source: Reforma, October 29, 2004 and El Financiero, November 24, 2004).

THE STATE OF JALISCO LOST ITS LEADERSHIP IN THE PRODUCTION OF PORK

Jalisco’s traditional leading role in pork production has vanished. According to information from SAGARPA, the State of Sonora has now established as the leading producer of pork in Mexico, with a production of over 201,000 tonnes. Jalisco’s underperformance is in part due to the generalized decrease in pork production in Mexico, and Sonora’s advantage to be located in a territory that is free of swine diseases. Another factor that has been affecting the domestic production of pork, are the strong imports from the USA, which has a strong presence in the northern region states. The Regional Pork Producers Association of Jalisco stated that in the last two years, approximately 300 producers have ceased operations. (Source: Milenio, November 5, 2005).

SORIANA WILL INVEST US$300 MILLION IN 2005

The Soriana supermarket chain is planning to invest US$300 million in 2005 to open up new branches in the North and Central Region of Mexico. With these investments, Soriana is planning to expand by 14% its selling capacity as compared to 2004. According to some analysts, Soriana has expanded its market share in the Mexican retail market to 17% from 16.5% in 2003, while the market share from Gigante and Comercial Mexicana has decreased. On the other hand, Wal-Mart’s market share has risen to 54.6%. Market analysts have indicated that there are possibilities that Carrefour will leave the Mexican market, where it has 28 branches that are not performing well. Soriana and Comercial Mexicana are interested in purchasing Carrefour facilities. Another company that is expected to sell its assets soon is Gigante. (Source: Reforma, November 5, 2004 and El Financiero, November 30, 2004).

GIGANTE STRIVES TO IMPROVE PERFORMANCE

Market analysts from Banamex and Santander believe the supermarkets chain Gigante will keep operating during 2005 in spite of the pressures from low sales over the last four years and the lack of a strategy to value customers. In 2004 Gigante reported a 3.7% drop on sales, compared with a growth of 4.1% by Wal Mart, 0.7% of Soriana, and 0.2% of Comercial Mexicana. Gigante, has implemented a low prices strategy. However, it has not been as effective as the ones adopted by its competitors. In addition, according to some analysts, the service that Gigante provides to its customers is also lower than that of its competitors. Gigante is planning to duplicate the capacity of its distribution centers in order to offer more competitive prices and to revert the loss of the share market. (Source: Reforma, November 10, 2004 and El Financiero, January 6, 2005).

GASTRONOMIC EVENT IN MEXICO TO PROMOTE CANADIAN FOOD PRODUCTS

In the framework of the 60th anniversary of diplomatic relations between Mexico and Canada, a Gastronomic festival was organized in Mexico to promote Canadian food products. The event took place from November 12-21, 2004 at the renowned restaurant O’Mei, located in the Nikko Hotel, Mexico City. This festival included 15 different traditional dishes, using high quality Canadian food products such as: duck, pork, beef and maple syrup. O’Mei’s executive chef Mr. Kuan Tai explained that even though there is a broad culinary diversity due to different ethnic groups in Canada, the Canadian food products used as ingredients for the menu are representatives of several Canadian provinces and are consumed commonly around the country. (Source: Reforma, November 12, 2005)

SINERGIA EXPANDS ITS SUPPLIERS’ BASE

Sinergia de Autoservicios, a company jointly created by Comercial Mexicana, Soriana and Gigante in 2003, has already developed a suppliers’ base of around 300 companies ready to enter the suppliers development program. Sinergia’s criteria to select these companies is first to consider those suppliers that are already selling products to at least one of the supermarket chains mentioned above, and then those who already have operative knowledge and are familiar with commercial procedures such as labelling and pricing. Currently, Sinergia deals with at least 65 large suppliers such as Unilever, Procter & Gamble and Herdez, among others. This program has shown good results and operative savings for both the supermarkets and the suppliers, which is why Sinergia has already identified 800 more companies as potential suppliers under this new business scheme. (Source: Reforma, November 16, 2004).

COMERCIAL MEXICANA WILL CONTINUE OPENING NEW STORES IN 2005

Mr. Javier Miranda, Executive sub-director of Comercial Mexicana indicated that this supermarket chain plans to open 22 new stores in 2005 and increase the sales company floor in 10%, representing an investment of US$240 million. These 22 new stores include: two Comercial Mexicana stores, seven Mega Comercial Mexicana stores, four Bodega Comercial stores, three COTSCO stores, one Sumesa and seven Restaurants California. The company also has the plan to open a Power Center in which a Mega or Cotsco store will be located, surrounded by other stores. This investment will be between US$20 and US$25 million. Comercial Mexicana closed 2004 with 239 stores and expects to have 260 by the end of 2005. Regional plans include an investment of US$17 million to set up a large supermarket branch at Merida, Yucatan, to be completed by the end of 2004. (Source: El Financiero, November 19, 2004 and Reforma, December 23, 2004).

RECORD SALES IN OCTOBER FOR SUPERMARKETS AND RETAILERS

The total sales of all commercial establishments affiliated to ANTAD (National Retailers and Supermarkets Association) reached a record level during October 2004. In the opinion of financial analysts, this is an indicator that the Mexican economy is improving, as well as the employment and consumption. ANTAD is integrated by 100 commercial chains including 47 supermarkets, 35 specialized stores, and 18 department stores; Wal-Mart however, is not a member of the association. Growth figures for October show 2.5% for supermarkets, 16% for specialized stores and 12% for department stores. (Source: Reforma, November 23, 2004).

MEXICO’S GOVERNMENT IS TRYING TO IMPROVE REGIONAL MARKETS

Mexico’s federal government has launched a program to improve regional wholesale markets and transform them into logistical hubs in order to increase sellers’ competitiveness when negotiating with supermarkets. This program started off in the city of Monterrey and will extend to Guadalajara, Mexico City, and five other states within the course of next year. The idea is to make positive changes in the way that agriculture and food products are being traded, managed and sold nowadays, making the "Centrales de Abasto" a distribution hub rather than just large wholesale markets. There are 60 of these large wholesale markets in Mexico, which account for over 27 thousand sellers, generate approximately 330 thousand employments and sell more than 45% of the total agri-food products sold in the country. Given that large Centrales de Abasto are no longer a functional system, the new program will include training, new equipment and new information related to local distribution and commercialization. The Mexican Ministry of Economy will invest close to US$1.3 million in this project next year, and the Mexican States are expected to contribute with another US$2.6 million. (Source: Reforma, November 23, 2004).

CONVENIENCE STORE CHAINS CONTINUE EXPANDING IN MEXICO

The convenience store chain, 7-Eleven, a society between Grupo Chapa and 7-Eleven Inc., is planning to investment of US$30 million in 2005 to expand its operations in Mexico and establish 100 new convenience stores in several states. The 7-Eleven chain has 500 stores in Mexico and its annual sales are estimated at US$300 million, with an annual average growth of 15%. Some of the main brands that this chain manages are: Café Select, Big Bite, Burger Bite, Big Lunch and Big Donuts. On the Other hand, Grupo Modelo has created a new convenience stores chain called: "Tiendas Extra" with 750 stores and the retail format store called: Modelorama, with 160 stores in 36 Mexican cities. The largest convenience store chain in Mexico is Oxxo with a total of 3,000 stores. (Source: Reforma, November 24, 2004 and El Financiero, 27 January 2005).

YOPLAIT SEEKS TO GAIN MARKET SHARE OVER DANONE

Yoplait Mexico, a company owned by Sigma Alimentos, is launching a new yogurt under the name Yoplus, which will target consumers that are looking for functional food products. Yoplait’s goal with the launch of this new product is to gain market share from Danone in the Mexican yogurt market. Currently, Danone is the leader in this market with a 35% share, Yoplait is second with 25% and the rest is shared among Nestle, Lala and Alpura (these latter two are Mexican brands). The Mexican yogurt market is estimated to be growing at an average rate of 10%, attributed to the current healthy foods trend. In addition, Mexico’s annual yogurt consumption is estimated at 2 kgs. per capita. Consumer preferences in this sector show a 35% preference for solid yogurt, 35% for liquid presentations and the rest is split among products aimed at children. Recently, the Mexican company Alpura also launched a new yogurt under the name "Vivendi", which is also rated in the healthy products segment and includes innovative fruit and vitamins combinations. (Source: November 26, 2004).

MEXICAN IMPORTS OF SKIM MILK POWDER ARE EXPECTED TO CONTINUE GROWING

Regardless the growing domestic production of milk that reached 9.9 billion liters in 2004, Mexican imports of skim milk powder and other dairy derivatives have continued to increase. USDA estimates that total Mexican imports of skim milk powder during 2004 reached 215,000 metric tones and are expected to continue growing. Most of these imports go to Liconsa, a government owned company in charge of securing the milk supply to the low income population. In addition, around 60% of the domestic production of skim milk powder is purchased by Liconsa. (Source: El Financiero, November 26, 2004)

MEXICAN IMPORTS OF U.S. AND CANADIAN WHEAT KEEP GROWING

The Mexican wheat milling industry is concerned because of the growing imports of wheat from the US and Canada, which currently satisfy 40% of the domestic demand. Domestic production of wheat has remained stagnant over the last few years because of climatic conditions and the lack of an efficient government policy. Wheat imports average 2 – 3 million metric tones per year and could eventually rise to 5 million metric tonnes in 2005, making the country vulnerable to the wheat price fluctuations. According to some analysts, in 2003 Mexico imported US$351.8 million of wheat and from January to September 2004, imports of wheat grew to US$442.92 million, placing Mexico as the 4th largest importer of wheat in the world. (Source: El Financiero, November 26, 2004)

DURING 2004 THE SALES OF THE MEXICAN BEER INDUSTRY DID NOT GROW AS EXPECTED

Several factors such as weather conditions and less disposable income among consumers have caused a moderate 2% increase in the sales volume of the Mexican beer industry during 2004. Some representatives of Grupo Modelo have indicated that 2004 has been a difficult and complex year, with increasingly more competitors in the market. Grupo Modelo and Femsa are the two largest beer producers in Mexico, jointly showing a 1.8% growth during the first nine months of 2004. Modelo is the market leader with a 56% share and brands like Corona and Victoria. Femsa, on the other hand, produces Bohemia, Carta Blanca, Superior, and has a 44% market share. (Source: December 8, 2004).

WAL-MART IS PLANNING TO BUY DIRECTLY FROM MEXICAN PRODUCERS

Wal-Mart Mexico and the National Farmers Association established a working relationship to open business channels with the Mexican producers of agriculture goods. The purpose of this initiative is to eliminate unnecessary intermediaries, as well as providing better prices to both producers and consumers. Among the standards that will be used by Wal-Mart to select new suppliers, volumes and quality are the most important. Mexico’s Secretary of Agriculture, Mr. Javier Usabiaga, also announced that a new credit program will be created to support those producers that sell directly to retail chains. Wal-Mart Mexico representatives stated that the chain’s great success is attributed to the creation of large distribution centres to market and transport goods in the country, with an infrastructure that allows storage and transportation of agriculture products, including chilled and frozen perishables. During 2004, Wal-Mart purchased over 353 thousand tonnes of Mexican fruits and vegetables. (Source: El Universal, December 8, 2004).

FRANCHISING IN MEXICO INCREASES DURING 2004

Ferenz Freher, President of the Mexican Franchising Association (AMF), estimates that franchising in Mexico increase 19% during 2004 with 135 new companies joining the 550 franchises already operating in the market. AMF expects an 18% growth in the market for 2005. Mexican franchises are very concentrated in the domestic market, with only 23 companies stepping abroad. (December 9, 2004).

THE MEXICAN WINE INDUSTRY IS EXPECTED TO GROW 12% IN 2005

The Mexican wine industry maintained its prices during the Christmas and New Year’s season, in order to increase market share. Representatives of the National Wine Union indicated that total wine sales in Mexico account for US$60 million (1 million boxes, 12-bottles each), out of which more than 50% is sold between the months of September to January. December sales account for 16% out of the total wine sales. Mexican wines maintained their prices during this high season, with affordable prices such as US$2.5 per bottle. According to the National Wine Union, imports affect sales volumes, but particularly injure prices, because most imported wines come from countries that support and subsidize wine, making the average wine prices decrease. In spite of the strong competition from imported wines, the Mexican wine industry has grown about 5% per year since 1998, and in 2005 is expected to show a 12% increase, mostly because of the strong promotional activities of Mexican wine. (Source: Reforma, December 20, 2004).

THE MEXICAN FLOUR INDUSTRY IS LOOSING MOMENTUM

After eight consecutive years of growth, the production of bread, cookies, pastas and flour tortillas in Mexico is facing a tremendous decline due to the introduction to the market of new fat-free or light products. This has been reflected in the lower consumption of flour products in Mexico. Mr. José Luis Fuente Pochat, President of Mexico’s Flour Industry Chamber pointed out that the decline in flour production started in 2003, given that Mexican consumers are now more attracted by light products and yogurt. Mr. Fuente noted that even though there are 97 flour mills in Mexico with a capacity to process 8 million tonnes of flour, in 2005 only about 3.9 million tones of flour will be processed. On the other hand, Mr. Fuente indicated that the industry is facing growing imports of wheat. Although Mexico has the lowest price of flour worldwide, 60% of the input is sourced from the U.S and Canada and the remaining 40% is sourced in Mexico. From the total flour processed in Mexico, 55% is used by traditional bakeries, 14% by the bakery industry, 10% is used by the pasta industry, 11% by the cookies industry and the remaining 10% by the flour tortilla industry. (Source: Reforma, December 20, 2004)

MEXICO IS AN ATTRACTIVE MARKET FOR FOREIGN WINE PRODUCERS

Mr. Marc Rosen, marketing manager of the wine-producing company Ernest & Julio Gallo indicated that although the per capita consumption of wine in Mexico is low (one cup per year), foreign wine producers are strongly targeting the Mexican market. Foreign wine brands as compared to domestic wine brands, can offer Mexican consumers the opportunity to taste wine every day and combine it with different dishes. According to Mr. Rosen, Mexican wine culture is evolving, since consumers are now more open to develop their wine tasting skills. Mr. Rosen explained that the most dynamic period for wine sales in Mexico is from October to December, during which approximately 40% of the annual sales are accomplished. (Source: Milenio, December 30, 2004).

THE CONSUMPTION OF JUICES IN MEXICO IS INCREASING

Over the last few years, the consumption of natural and healthy products in Mexico has been increasing. Manufacturers of juices and nectars are now taking actions to offer better and more comfortable packages and presentations, as well as more exotic fruit mixes and flavours. Annual consumption of juice in Mexico is estimated at nine litres per capita, and according to the National Chamber of Preserved Foods, the domestic production of juice moved from 1,700 tonnes in 1999 to 1,900 tonnes in 2003. In addition, total sales grew from US$806 million in 1999, to US$1.1 billion in 2003. This global trend to consume natural and healthy products is attributed to an intense marketing campaign, informing consumers that other beverages such as juice, water, nectars and yogurts are healthier than sodas. The largest firms in the Mexican juice industry are: Jumex (47.8% market share); Del Valle (32.6%); and Valle Redondo (5.7%). Forecasts for this industry establish that packages will move from less glass and aluminium cans to more plastic and carton; also, that juices consumption will increase even further among middle and upper class young consumers. (Source: Milenio, January 11, 2005).

INSTANT NOODLES’ CONSUMPTION IS HIGHER THAN THAT OF BEANS AND RICE

Diconsa stores, which are owned by the Federal government and sell basic products at low prices, have reported that recently, they are selling more snack foods than beans, grains, pulses or canned foods such as sardines. In most Diconsa stores in Mexico (over 22 thousand units), the products that are most successfully sold are: potato chips, industrialized muffins, pastries, bread, and instant noodles. Instant Noodles in Mexico have had a big success, showing growth figures of up to 30%. Some of the stores managers state that this trend was even more evident when the clients’ purchasing power increased, and infrastructure allowed certain products to reach rural areas. Therefore, the Mexican Health and Social Development Ministries are currently analysing the consumers’ habits in rural areas of Mexico, given that this shift has had serious implications on the population’s health, now presenting cases of obesity, high cholesterol, diabetes, and heart diseases. Representatives of the National Rural Owners Confederation stated that the grains production in Mexico has dramatically decreased in the last few years, and the country now suffers from a severe agricultural deficit (nearly 50%), which requires large imports from other countries. President Fox declared that in the near future, Diconsa will cease imports and will purchase only domestic products, to offer good prices and support Mexican producers. (Source: Milenio, January 12, 2005).

WAL-MART MEXICO REACHES HISTORIC RECORD SALES DURING 2004

Wal-Mart, the strongest supermarket chain in Mexico, reached historic sales level during 2004, In addition, the company opened 58 new stores in several formats, adding up to a total of 564 stores and 284 restaurants. In the opinion of financial analysts, this supermarket chain might be able to increase it sales even more in 2005, if this trend remains. Wal-Mart is known as the best supermarkets operator in the country, presenting an average growth of 9% in sales area, and an 11% average growth in total sales during the last five years. Wal-Mart is increasingly showing large differences between its performance and those of its competitors: the Members of the Retailers and Supermarket Association (ANTAD). On average, Wal-Mart’s sales are 80% higher than those from Comercial Mexicana, Gigante and Soriana per square metre. Another advantage to Wal-Mart’s success is the company’s strategy to offer discount prices all-year-round, decreasing its competitors’ advantages. (Source: Milenio January 13, 2005).

MEXICO IS IMPORTING MORE FOOD PRODUCTS

Prices of certain agricultural products have increased during the January-November 2004 period. Mexico’s food sector has an increasing supply deficit which is estimated at over US$2 billion. After three years of continuous agricultural deficits, imported products continue to increase, showing rates of up to 119% for animal flours, 90% for sugar, and 81% for butter among others. National Industrial Chambers pointed out that imports are not negative, since they are only responding to domestic needs, which are not being satisfied by local producers, however, new efforts need to be made in the Mexican agricultural sector. Otherwise domestic producers will continue facing difficulties. (Source: January 20, 2005).

WAL-MART AND LIVERPOOL REINFORCE THEIR POSITION IN THE MEXICAN RETAIL MARKET

The National Retailers and Supermarkets Association (ANTAD) reported the opening of 48 new self-service branches, 93 department stores and 1,728 specialized retailers during 2004, expanding the sales capacity by 9.5% to 6,909 companies. Wal-Mart, which is not affiliated to ANTAD, has opened 41 new establishments to reach a total of 694 establishments, from which 410 are self-service branches scattered throughout 68 Mexican cities and creating 110,000 jobs. Wal-Mart has 2.3 million square meters of selling area (up 11% in 2004), split into 410 branches and 284 restaurants. In the case of departmental stores, the most active chain is Liverpool with a total of 47 stores, representing a 500,000 square meters selling area and employing 25,000 people. Liverpool will start the construction of facilities at Chetumal, Cuernavaca and the Mexico’s surrounding area, in addition to a new distribution center that will be constructed in the State of Mexico. (Source: El Financiero, January 26, 2005)

TRADE POLICY DEVELOPMENTS AND MARKET ACCESS ISSUES THAT CANADIAN EXPORTERS SHOULD KNOW ABOUT:

SEMARNAT PUBLISHES A NEW NOM TO REGULATE IMPORTS OF CHRISTMAS TREES INTO MEXICO

SEMARNAT (Mexican Ministry of Environment) published a new Mexican Mandatory Regulation: NOM-013-SEMARNAT-2004 establishing phytosanitary regulations for imports of Christmas trees.

The Canadian Food Inspection Agency has harmonized its inspection and certification procedures to comply with the requirements established in the new NOM for Christmas trees.

SALUD ISSUES NEW APPLICATION FORMS TO REQUEST SANITARY IMPORT PERMITS FOR CERTAIN FOOD AND BEVERAGES

The Mexican Ministry of Health (Salud) published new application forms to apply for sanitary permits to import seafood and processed foods regulated by Salud.

The new forms published by Salud are a consolidation of several older forms, without demanding additional information. Mexican importers are responsible for obtaining the import permits from Salud. However, the importers need full cooperation from the exporter to complete this process.

MEXICO REMOVES THE ANTIDUMPING DUTIES ON IMPORTS OF BOVINE CARCASSES FROM THE U.S.

As a follow up to the NAFTA Chapter 19 panel decision, Mexico announced the removal of the antidumping duties on imports of bovine carcasses from the U.S. However, it will maintain the antidumping duties on imports of beef from the U.S.

Canadian exporters of beef will continue to have a small advantage over U.S. exporters of beef which will continue paying antidumping duties in the Mexican market.

SEMARNAT ISSUES NEW APPLICATION FORMS TO REQUEST THE INSPECTION OF IMPORTED WOOD AND WILD FAUNA SPECIES

The Mexican Ministry of Environment (SEMARNAT) published new application forms to request the inspection of imported wood and wild fauna species.

Mexican importers are responsible for submitting the verification application forms before SEMARNAT. However, the importer needs full cooperation from the exporter to fill out the application forms and obtain the documents that need to be attached to these applications.

NEW INSPECTION FEES ON IMPORTED ANIMALS AND ANIMAL PRODUCTS

In December 2004 the Mexican authorities announced new inspection fees on imported meat and live animals.

The new inspection fees are not mandatory and will only be charged in case that the importer requests the inspection of the meat or animals to be imported. Otherwise, the importer will only have to pay the fees currently in force to obtain a zoosanitary import certificate.

MEXICO DOES NOT APPLY FURTHER RESTRICTIONS ON CANADIAN BEEF DUE TO THE 2 NEW BSE CASES

The Mexican Ministry of Agriculture (SAGARPA) confirmed that no further restrictions will be applied to imports of beef products from Canada due to the two new BSE cases detected in Alberta. SAGARPA confirmed that the list of Canadian beef products that are currently eligible for being exported to Mexico will continue to have access to the Mexican market without any changes in its import requirements.

SALUD CANCELS A NOM RELATED TO RADIONUCLIDE CONTAMINATION IN IMPORTED FOOD

The Mexican Ministry of Health (Salud) cancelled NOM-088-SSA1-1994, which established maximum limits of radionuclides for certain imported food such as milk, bottled water, fish, meat and oils.

The cancellation of this NOM will eliminate unnecessary requirements for several Canadian products highly exported to Mexico such as meat, fish and oils.

U.S. EXPORTERS AND ECONOMIA REACH AN AGREEMENT TO REMOVE THE ANTIDUMPING DUTIES ON U.S. APPLES

The Northwest Fruit Exporters Association from the U.S. reached an agreement with the Mexican Ministry of Economy (Economia) to remove a 46.58% antidumping duty on U.S. apples imported at or above certain minimum prices.

The advantage that Canadian exporters of apples used to have over U.S. exporters in the Mexican market will disappear with this new agreement.

MEXICO ANNOUNCES THE NAFTA TARIFF RATE QUOTAS FOR CANADIAN AND U.S. BEANS FOR 2005-2007

Mexico announced the NAFTA Tariff Rate Quotas (TRQs) to import beans from the U.S. and Canada under a 0% duty from 2005-2007. The TRQs will be allocated through public auctions that will take place twice a year. The first auction of 2005 will take place in March 1st and the second auction in June 1st. The 2005 NAFTA TRQ for Canadian beans is: 2,076.181 tonnes

MEXICAN CUSTOMS ANNOUNCE CHANGES TO THE PORTS OF ENTRY FOR CERTAIN AGRI-FOOD PRODUCTS

The Mexican Customs Ministry announced modifications to the authorized ports of entry for imports of certain agri-food products such as apples, beans, corn, fish, fats, cigars, meat, skins, animal offals and alcoholic beverages.

Before shipping agri-food products to Mexico, Canadian exporters must check if the port of entry they are planning to use is authorized to allow the importation of their products

MEXICO ISSUES A NEW NOM ESTABLISHING PHYTOSANITARY MEASURES FOR WOOD PACKAGING USED IN INTERNATIONAL TRADE

The Mexican Environment Ministry (SEMARNAT) published a new NOM that will introduce phytosanitary regulations for wood packaging used in international trade. The new NOM is consistent with ISPM No. 15, which is also being implemented in Canada.

The provisions of the new NOM will be applied to imported wood packaging as of September 16, 2005.

MEXICO ANNOUNCES THE 2005 TARIFF RATE QUOTA FOR IMPORTING SKIM MILK POWDER FROM WTO COUNTRIES

The Mexican Ministry of Economy (Economia) announced the 2005 TRQ (80,000 tonnes) to import skim milk powder (SMP) from WTO countries. Economia will use direct assignment and public auction mechanisms for the allocation of the TRQ.

Though Canadian SMP does not receive any tariff preferences in the Mexican market under NAFTA, it can be exported duty-free to Mexico through this TRQ for WTO countries.

MEXICO ISSUES A NEW REGULATION FOR THE REGISTRATION AND IMPORTATION OF PESTICIDES AND FERTILIZERS

The Mexican Environment Ministry (SEMARNAT) published a new regulation for the registration and importation of pesticides and fertilizers that will be enforced on March 28, 2005.

Canadian exporters of pesticides and fertilizers to Mexico are advised to work closely with their importers to comply with the new regulation.

MODIFICATIONS TO THE IMPORT REGULATIONS FOR AGRI-FOOD PRODUCTS FOR HUMAN CONSUMPTION

The Mexican Ministry of Health (Salud) announced modifications to its current import regulations for agri-food products, which will enter into force on February 28, 2005. Under these modifications, the import requirements for certain agri-food products will be increased or reduced according to the potential risk to human health that Salud attributes to each product.

Canadian exporters are advised to work closely with their importers to ensure that the new Salud regulations are properly fulfilled.

REMOVAL OF THE FEES CHARGED FOR THE ISSUING OF SANITARY IMPORT PERMITS FOR IMPORTS OF LIVE ANIMALS AND MEAT PRODUCTS

The Mexican Ministry of Agriculture (SAGARPA) eliminated the fees previously charged for issuing sanitary import permits (HRZs) for live animals and meat products. This measure will save costs for Mexican importers of Canadian meat products.

MEXICO ANNOUNCES REDUCTIONS TO ITS IMPORT DUTIES FOR SEVERAL AGRI-FOOD PRODUCTS

The Mexican Ministry of Economy announced reductions to its MFN import duties for several agri-food products.

Under NAFTA, most Canadian agri-food products already have duty free access to the Mexican market. Therefore, this reduction will only benefit some Canadian products that were excluded from any tariff preferences under NAFTA, such as prepared poultry products.

CANADIAN AGRI-FOOD EXPORTS TO MEXICO REACHED A RECORD LEVEL DURING JANUARY – OCTOBER 2004

According to Mexico’s official import statistics, during the January-October 2004 period, Canadian Agriculture and Agri-food exports to Mexico reached an historic record of US$904 million, which is 21% higher than the total exports reported in 2003. Among the main Canadian agri-food products exported to Mexico during this period were: beef (US$238 mill.), canola (US$227.2 mill.), soft wheat (US$99.2 million), pork (US$83.9 mill.), malt (US$24.9 mill.), animal fats (US$24.5 mill.), canola oil (US$23.0 million), frozen French fries (US$18.7 mill.) and canary seed (US$13.2 mill.). In addition, Canadian exports of fish and seafood to Mexico from January to October 2004 (US$9.7 mill.), were 9.6% higher than the exports reported in the same period of 2003.

For more information about the articles included in this report please contact:

Alejandro Ruiz
Agri-Food Commercial Officer
Canadian Embassy, México
Tel. (52-55) 5724-7989
Fax. (52-55) 5724-7982
E-mail: alejandro.ruiz@dfait-maeci.gc.ca

TRADE LEADS

The following Mexican company is interested in importing pickled and blue shipskin from Canada:

Comercial Riecsa S.A. DE C.V.
Contact: Noé Aguado
Phone. (52-477) 778 44 48
Fax. (52-477) 778 44 48
E-mail: noe_lem@yahoo.com

The following Mexican company is interested in importing bottled (glass format) spring water and mineral water from Canada:

Amalco, S.A. de C.V.
Contact: Mario Hernández Venzor
Phone. (52-55) 5701-5188, (52-55) 5701-5068
Fax. (52-55) 5558-1379
E-mail: marioher@att.net.mx

The following Mexican company is interested in importing fish and seafood from British Columbia:

Distribuidora El Sargazo S. A. de C.V.
Contact: Moisés Vega Lopez
Phone. (52-55) 5579-7561
Fax. (52-55) 5590-3399
E-mail: movegamex@prodigy.net.mx

Over the past few weeks there has been an increase in the number of shipments that have experienced technical/administrative problems at Mexican border crossing points. Most have been caused by small errors in documents that require considerable time to resolve (and higher costs to shippers).

Shippers would benefit from careful review of their documents prior to shipment (especially for new-to-market exporters or exports of new products). Shippers should also consult our Canadian Border Clearance Representative (BCR) who can review documents and obtain pre-clearance verification, and lastly, assist with border crossing problems for agri-food products. The BCR office can be contacted at:

BORDER CLEARANCE REPRESENTATIVE

Luis A. Pérez,
Tel: (011-52) (867) 719-00-03
Mobile: 1 (956) 206-8771
Fax: (011-52) (867) 719-07-64
E-mail: luispere@nlaredo.globalpc.net

NEW: DESTINATION MEXICO VIDEO

Visit the Agri-Food Trade Service (ATS) website (ats-sea.agr.gc.ca/mexico/) to watch the brand new Destination Mexico Video. This is a video produced for Canadian exporters to discover the amazing opportunities the Mexican market has to offer, including tips from companies on how to face the challenges of exporting agri-food products to this market.