Market Information
Latin America and Caribbean

Overview of the Mexican Cattle and Beef Sector

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

This is an overview of the Mexican market for cattle (dairy and beef cattle) and beef, based on an analysis of trade in 2002 and 2003 (up to the ban on Canadian cattle and beef imposed by Mexico in May, 2003, due to the single BSE case detected in Alberta).

Production

Mexico has a total cattle stock of around 30 million head. More than 90% of this stock is composed of beef cattle.

The cattle stock in Mexico suffered a decline in 1996 and 1997 due to severe droughts and the economic crisis that Mexico was facing in those years. This was also reflected in the Mexican production of cattle, which was reduced from 2.6 million head in 1995 to 2.4 million head in 1997.

Since 1998, the cattle production began to show an upward trend with the gradual recovery of the Mexican economy and the implementation of government programs for the development of cattle stocks. In 2002, Mexico reached a cattle production of 2.8 million head, which is the highest figure registered in the last 20 years.

The Mexican States that reported the highest production of cattle in 2002 were: Veracruz (14.4%), Jalisco (12.6%), Chiapas (6.2%), Sinaloa (5.3%), Sonora (5.2%), Chihuahua (4.6%) and Durango (4.4%).

Source: Mexican Ministry of Agriculture (SAGARPA).

Around 50% of the cattle slaughters are made in municipal plants, 30% are made in local facilities and 20% are made in specialized federally inspected (TIF) plants.

In 1990, the production of beef in Mexico represented about 41% of the total production of meats. However, this share was reduced to 31% in 2002, due to a declining Mexican consumption of this type of meat.

The Mexican production of beef was affected by the reduction of the cattle stocks during 1996 and 1997. However, since 1998 it has shown a recovery that is mainly explained by the application of new technologies in the beef processing industry.

The main Mexican States that produce beef are: Veracruz (14.5%), Jalisco (12.4%), Chiapas (6.2%), Sonora (4.7%), Sinaloa (4.4%), Chihuahua (4.4%) and Durango (4.3%).

Source: Mexican Ministry of Agriculture (SAGARPA).

Consumption

During the period 1995-2002, domestic consumption of beef showed an annual average growth rate of 4.1%. It is estimated that around 80% of the domestic consumption of beef is supplied by domestic producers and the remaining 20% is imported.

It is important to note that in the past, beef was the main meat consumed in Mexico. However, today Mexican consumers prefer other types of meats such as poultry, which is less expensive and some consider healthier than beef.

This change in consumption patterns has been reflected in the per capita consumption of beef, which has maintained at the same level (16.3 kg.) during the last 4 years.

e/ Estimated
Source: Mexican Ministry of Agriculture (SAGARPA).

Trade

After a significant increase in the Mexican imports of pure-bred breeding bovines during 2001 (83, 869 head with a value of 36.6 million US$), imports fell to 39, 106 head with a value of 48 million US$ in 2002.

The U.S. share in the Mexican imports of pure-bred breeding bovines dropped from 88.2% in 2001 to 32.4% in 2002, while Canadian share grew from 7.9% in 2001 to 20.8% in 2002.

Australia, which was not an historic supplier of these types of animals to Mexico, exported 15, 583 cattle head during 2002, which represented 39.8% of the total Mexican imports of pure-bred breeding bovines.

Australian cattle was coming in at a lower price but generally considered to be of lower quality.

During the period January-May, 2003, the Mexican imports of pure-bred breeding bovines (7, 036 head with a value of 9.8 million US$) registered a decline of 51.9% as compared with the same period of 2002 (14, 637 head with a value of 21.1 million US$).

This decline on imports is explained by a reduction of 18.9% in the imports from the U.S. and a reduction of 42.8% in the imports from Canada, which fell from 3, 740 head with a value of 6.9 million US$ to 2, 138 head with a value of 3.4 million US$.

Includes tariff line: 0102.10.01
Source: Mexican Secretariat of Economy.

Includes tariff line: 0102.10.01
Source: Mexican Secretariat of Economy.

Mexico does not register any significant exports of pure-bred breeding bovines.

Considering the increases in the domestic production of cattle, the Mexican imports of slaughter cattle reduced from 179, 574 head in 2000 to 155, 550 head in 2002. In terms of value, there was a decline in the price of imported cattle, moving from 548 dlrs/head in 2000 to 454.5 dlrs/head in 2002.

The main suppliers of these animals to Mexico during 2002 were the United States (85.5%), Nicaragua (11.3%) and Australia (3.2%).

During the first 5 months of 2003 the Mexican imports of slaughter cattle continued reducing. The imports of slaughter cattle from the U.S. were reduced by 77.6%, falling from 43, 439 head with a value of 28.8 million US$ to 9, 738 head with a value of 6.5 million US$. The Mexican imports of slaughter cattle from Nicaragua and Australia also showed reductions as compared with last year.

Includes tariff lines: 0102.90.02, 0102.90.03 and 0102.90.99
Source: Mexican Secretariat of Economy.

Includes tariff lines: 0102.90.02, 0102.90.03 and 0102.90.99
Source: Mexican Secretariat of Economy.

Mexico is a significant exporter of slaughter cattle. However, during the period 1999-2002 its exports declined 8.5% in terms of volume and 3.7% in terms of value, falling to 947, 234 head with a value of 306.9 million US$.

During the first 5 months of 2003 the Mexican exports of slaughter cattle showed a significant recovery and registered a growth of 719% as compared with last year same period.

It is important to note that almost all the Mexican exports of slaughter cattle (99%) go the U.S. market.

Includes tariff lines: 0102.90.02, 0102.90.03 and 0102.90.99
Source: Mexican Secretariat of Economy.

During the period 1999-2002, the Mexican imports of dairy cows were reduced by 36.2%, moving from 18, 172 head with a value of 20.6 million US$ to 11, 598 head with a value of 14.8 million US$ in 2002.

Canada is one of the main suppliers of these animals to Mexico (21.8% share in 2002). However, in recent years it has been loosing market share against Australian and New Zealand dairy cows.

During the period Jan-May, 2003 the Mexican imports of dairy cows showed a decline of 81.7% as compared with the same period of 2002, falling from 7, 534 head with a value of 9.1 million US$ to 1, 381 head with a value of 2.2 million US$.

For the first 5 months of 2003 the Mexican imports of dairy cows from Canada were reduced by 27.7% and 24.8% in the case of the U.S. Likewise, no imports of dairy cows were reported from Australia and New Zealand during that period.

Includes tariff line: 0102.90.01
Source: Mexican Secretariat of Economy.

Includes tariff line: 0102.90.01
Source: Mexican Secretariat of Economy.

Mexico does not register any significant exports of dairy cows.

It is important to note that since the implementation of the North American Free Trade Agreement (January 1, 1994), all the Canadian and U.S. live bovines, bovine carcasses, and beef have duty free access to the Mexican market. The Canadian and U.S. bovine edible offals have had duty free access to Mexico since January 1, 2003.

The Mexican imports of bovine carcasses and half-carcasses moved from 6, 470 tonnes with a value of 11.3 million US$ in 1999 to 5, 984 tonnes with a value of 11.1 million US$ in 2002.

In 2002, the U.S. increased its market share as supplier to Mexico of bovine carcasses and half-carcasses to 96.9% as compared to 89.9% in 2001, while Canada reduced its market share from 9.9% in 2001 to 3.1% in 2002.

During the first 5 months of 2003 the Mexican imports of bovine carcasses showed a reduction of 14.9% as compared with the same period of 2002. This decline is mainly explained by a fall of 87.6% in the imports from Canada, which moved from 89 tonnes with a value of US$ 200, 000 to only 11 tonnes with a value of US$20, 000.

The Mexican imports of bovine carcasses from the U.S. also registered a decline of 11.8% as compared with the first 5 months of 2002.

Includes tariff lines: 0201.10.01 and 0202.10.01
Source: Mexican Secretariat of Economy.

Includes tariff lines: 0201.10.01 and 0202.10.01
Source: Mexican Secretariat of Economy.

Mexico does not register any significant exports of bovine carcasses and half carcasses.

During the period 1999-2002, the Mexican imports of beef increased 37% in terms of volume and 71% in terms of value, moving from 255 thousand tonnes with a value of 584 million US$ to 350 thousand tonnes with a value of 998 million US$.

The main supplier of beef to Mexico is the United States. Its market share was reduced because of the anti-dumping duties applied by Mexico since 1999. However, in 2002 the U.S. beef exports to Mexico increased by 21.3% reaching 278 thousand tonnes with a value of 818 million US$ and their market share grew to 79.4%.

It is important to note that the price per tonne of the U.S. beef exports to Mexico reduced from 3, 010 US$/tonne in 2001 to 2, 947 US$/tonne in 2002.

During the period 1999-2001, Canada showed increases in its exports of beef to Mexico and its market share grew from 8% to 19.3%. However, the exports of Canadian beef to Mexico for 2002 maintained relatively flat (59 thousand tonnes with a value of 151 million US$) as compared with last year exports and its market share reduced to 16.8%.

Other suppliers of beef to Mexico are Australia with a market share of 2.2% and New Zealand with 1.0%.

During the period Jan-May, 2003 the Mexican imports of beef reduced 16.1% as compared with the same period of 2002, moving from 137, 561 tonnes with a value of 399 million US$ to 115, 479 tonnes with a value of 355 million US$.

The decline of the Mexican imports of beef during the first 5 months of 2003 was explained by a reduction of 23.1% in the imports from Canada, 15.8% in the imports from the U.S. and 14.6% in the imports from Australia.

On the other hand, New Zealand reported an increase of 39.5% in its exports of beef to Mexico as compared with last year.

Includes tariff lines: 0201.20.99, 0201.30.01, 0202.20.99 and 0202.30.01
Source: Mexican Secretariat of Economy.

Includes tariff lines: 0201.20.99, 0201.30.01, 0202.20.99 and 0202.30.01
Source: Mexican Secretariat of Economy.

The Mexican exports of beef grew from 2, 997 tonnes with a value of 10.1 million US$ in 1999 to 2, 684 tonnes with a value of 13.7 million US$ in 2002. Around 99% of the Mexican exports of beef go to the U.S.

During the first 5 months of 2003 the Mexican exports of beef continued growing as compared with last year, moving from 952 tonnes with a value of 5.5 million US$ to 1, 659 tonnes with a value of 8.2 million US$.

Includes tariff lines: 020120, 020130, 020220 and 020230
Source: Mexican Secretariat of Economy.

The Mexican imports of bovine edible offals have also been increasing. During the period 1999-2002, they jumped from 69, 817 tonnes with a value of 52.5 million US$ to 82, 406 tonnes with a value of 117.5 million US$.

The United States is the main supplier of these products to Mexico with a market share of 84.2%. In second place appears Canada with a market share of 7.3%. The Canadian exports of bovine edible offals to Mexico for 2002 (6, 010 tonnes with a value of 9.5 million US$) increased 24.7% as compared with the 2001 exports.

Other exporters of bovine edible offals to Mexico are Australia with a market share of 4% and New Zealand with a share of 1%.

During the first 5 months of 2003 the Mexican imports of bovine offals grew 3.6% as compared with the first 5 months of 2002. This increase was explained by a growth of 7.5% in the Mexican imports of bovine offals from the U.S. and 26.8% in the case of bovine offals from New Zealand.

On the other hand, the Mexican imports of Canadian bovine offals showed a reduction of 12% as compared with last year, moving from 2, 333 tonnes with a value of 3.9 million US$ to 2, 054 tonnes with a value of 3.5 million US$.

Includes tariff lines: 0206.10.01, 0206.21.01, 0206.22.01 and 0206.29.99
Source: Mexican Secretariat of Economy.

Includes tariff lines: 0206.10.01, 0206.21.01, 0206.22.01 and 0206.29.99
Source: Mexican Secretariat of Economy.

Mexico does not export significant volumes of bovine edible offals. Actually, during the period 1999-2002 its exports fell 77.2%, moving from 789 tonnes to 180 tonnes, with a value of 500 thousand US$.

During the period Jan-May, 2003 the Mexican exports of edible offals showed a reduction of 28.5% as compared with the same period of 2002.

Includes tariff lines: 020610, 020621, 020622 and 020629.
Source: Mexican Secretariat of Economy.

It is important to note that since the end of May, 2003 the Canadian exports of live bovines, beef and beef products to Mexico have been seriously affected because of the ban imposed by Mexico due to the Bovine Spongiform Encephalopathy (BSE) case detected in Canada.

Exports of certain Canadian beef products started to resume in November, 2003. However, the complete re-opening of the Mexican border to all Canadian beef products (including cattle) will take additional time (For more reference see the section: Sanitary Issues).

Sanitary Issues

On May 20, 2003, Mexico imposed a ban on imports of Canadian cattle, beef and their products due to a single cow infected with Bovine Spongiform Encephalopathy (BSE) detected in Alberta. During this process, Canada has maintained close communication with the Mexican authorities to inform them about the developments of the BSE investigation and the new measures implemented in Canada related to this case.

After several high senior level representations and technical discussions with the Mexican authorities, on October 1, 2003 Mexico re-opened the border to imports of certain Canadian boneless beef products from animals under 30 months of age.

After this announcement, the Canadian Food Inspection Agency (CFIA) with the help of the Canadian Embassy has been working with the Mexican authorities to include other beef products eligible to be exported to Mexico, in harmonization with the U.S. requirements.

Currently, Mexico is allowing the same Canadian beef products that are allowed to be imported into the U.S., including boneless beef, trimmings, tallow, liver, heart, tongue, lips and diaphragm.

Regarding cattle, Mexico has indicated that it is willing to re-open the border to imports of Canadian dairy breeding cattle once the USDA confirms that this action will not jeopardize their exports to the U.S. market.

On November 4, 2003 the U.S. published the rules (for a 60-day period of comments), to allow imports of young Canadian cattle (less than 30 months old) for immediate slaughter and it is expected that Mexico will follow suit. However, the re-opening of the Mexican border for dairy breeding cattle is expected to take additional time.

Trade Policy

In March, 2003 the Mexican beef industry requested to the Ministry of Economy (Economia) the initiation of a safeguard investigation against imports of beef. According to the Mexican beef producers there has been a surge on the imports of beef, which has been causing injury to the industry and therefore it is necessary to establish a safeguard to counteract this situation.

On November 17, 2003 Economia informed the Canadian Embassy that they finished their analysis about the case and concluded that it is necessary to initiate a global safeguard on imports of beef. However, they confirmed informally that Canada will not be included in this safeguard action.

The decision to exclude Canada from the safeguard action was based on its current market share and growth rate of exports, which according to Economia do not represent a serious threat to the Mexican beef industry. Economia has indicated that the safeguard would be implemented mainly to counteract imports of U.S. beef and the Mexican and U.S. beef industries have already met to discuss this issue.