Market Information
Latin America and Caribbean

Overview of the Mexican Egg Sector

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

Production

Mexico is the sixth largest producer of eggs in the world. During the period 1990-2001, the production of eggs in Mexico showed an annual average growth rate of 5.8% moving from 1 million tons to almost 1.9 million tons. More than 50% of the total egg production in Mexico is concentrated in two States: Jalisco and Puebla.

The production of eggs has been essential in the economic development of the animal products sector in Mexico. During the 90's, the value of egg production represented around 10.5% of the total value of animal product production in Mexico.

*Annual Average Growth Rate
Source: Mexican Ministry of Agriculture.

The development of the egg sector in Mexico is mainly explained by significant investments in infrastructure and technology and the vertical integration of egg producers.

The National Poultry Union is the main organization of egg producers in Mexico. Today, is comprised of about 48 associations of poultry producers and 4 State Unions. Its main purposes are to defend the interests of the Mexican poultry producers and to propose initiatives for the development of the poultry sector.

Prices

During the period 1990-1993, the domestic egg price maintained relatively stable at an average of 2.8 Mexican pesos/kg. This stability was a result of a government intervention on prices of staple food (including eggs). The government intervention in the egg sector concluded in 1994 and since that date, egg prices are determined by the market.

In 1996, egg prices increased to 7.6 Mx Pesos/kg., because of the high prices of coarse grains reported that year. The following years, the prices of coarse grains reduced and domestic production of eggs increased, causing a steady reduction of egg prices in the Mexican market.

Source: National Service of Markets Information.

Consumption

The egg is one of the most demanded food products in the Mexican market. Today, Mexico is the third largest consumer of eggs in the world.

The per capita consumption of eggs increased from 16.7 kg. in 1994 to 20 kg. in 2001.

*Annual Average Growth Rate
Source: Mexican Ministry of Agriculture.

It is important to note that more than 99% of the eggs consumed in the Mexican market are supplied by the domestic industry. This indicates the self-sufficiency that Mexico has in this product and a very low dependency on imports.

Domestic Policy

Mexico has a set of programs for agriculture support under the name Alianza para el Campo (Alliance for Agriculture). Under the Alianza para el Campo, there is a program for the development of the domestic poultry sector.

The purpose of this program is to develop the infrastructure and equipment of the sector and to promote the use of new technologies in order to increase productivity and improve the transformation process of poultry products.

The program covers all the Mexican territory but preference is given to the major producers of poultry.

For 2002, the federal subsidies can cover up to 50% of the investment required, with a maximum of 150,000 MX pesos for equipment and technology projects and 500,000 MX pesos for infrastructure projects.

Trade Policy

Considering that eggs are considered a staple food in the Mexican market, imports of these products are subject to a special treatment.

Until 1994, imports of eggs were made under a special program negotiated between the poultry sector and the government. Most of the eggs imports were used for the industrial development of the border areas and sometimes they were used by the State Trading Enterprise called Conasupo to regulate the domestic market in case of shortage.

During the negotiations of NAFTA, Mexico established a special treatment for the imports of eggs. In the case of the U.S., Mexico established a Tariff Rate Quota (TRQ) of 6,500 metric tons (with an annual growth of 3%) to allow duty free imports of fresh eggs (even fertile) from the U.S. The over-quota duty for these products was established at 50% and would be eliminated 10 years after the implementation of NAFTA. Most of the U.S. eggs imported under the TRQ are used to satisfy the demand of industries located in the border region and the rest is used for domestic consumption.

For the imports of the rest of eggs from the U.S., Mexico agreed to phase out the import duties (20%) in a period of 10 years. So, on January 1, 2003, all imports of eggs from the U.S. will have duty free access without quantity restrictions in the Mexican market.

On the other hand, Mexico does not grant any tariff preferences to imports of Canadian eggs, since eggs are a supply managed commodity and were excluded from the NAFTA negotiations.

In the rest of the Free Trade Agreements signed by Mexico, imports of eggs were excluded from any tariffs preferences, except with Costa Rica and Nicaragua, in which it was agreed a phase out of tariffs for imports of eggs over a period of 10 years.

For imports of fresh eggs (even fertile) from the rest of the world, Mexico has a Most Favored Nation (MFN) duty of 46% and for processed eggs, the MFN duty is 20% (Canadian eggs are subject to the MFN duties).

Trade

Because of the protectionist trade measures, Mexico does not register huge imports of eggs. During the period 1990-2001, Mexican imports of fresh eggs (even fertile) showed an irregular pattern that is explained by the changes in the domestic demand. The greatest volume of imports was registered in 1997 at 11,900 metric tons.

*Annual Average Growth Rate
Source: Mexican Ministry of Economy.

The United States supplies more than 98% of the Mexican imports of these types of eggs and the rest is supplied by Chile.

Regarding processed eggs (frozen, cooked, dried), during the period 1990-1994, Mexico reported an increase on imports of these products, due to the high demand of the industry. From 1995 to 1999, imports of these products reduced significantly. However, in the last two years, they have been maintained at a level of 1.4 thousand tons.

*Annual Average Growth Rate
Source: Mexican Ministry of Economy.

The United States supplies around 91% of the Mexican imports of processed eggs and the rest is provided by Canada.

Considering that almost the whole Mexican production of eggs is consumed in the domestic market, there is not much left for export. During 2001, Mexico only exported around 92 metric tons of fresh eggs (even fertile) and 270 metric tons of processed eggs.

The main export markets for fresh eggs are Central America, Colombia and Venezuela and for processed eggs, the U.S and Netherlands.

Drafted by: Alejandro Ruiz

Approved by: Kim O'Neil