Mexico's poultry output set to increase

 

 

Mexican poultry production is forecast to grow through 2010, despite facing its first reduction in 2009, according to a USDA attache report posted Tuesday (Sept 8) on the Foreign Agricultural Services Web site.

 

Economic crisis, lower family income and the H1N1 flu outbreak affected will continue to affect the sector, the report said.

 

Imports of US poultry and poultry products are forecast to increase in response to growing demand, but at a slower rate then in past years and the composition of import products will change.

 

While the entire Mexican GDP is declining, the agriculture GDP is increasing and the Mexican poultry sector has an opportunity to expand. In 2010, the Mexican consumer will enjoy chicken, turkey and egg products at competitive prices. Furthermore, chicken will be the leading meat produced within Mexico.

 

Chicken meat production is expected to increase in 2010, however it is anticipated to decline 1.5 percent in 2009, such a decline has not occurred for over a decade. This decline is primarily attributed to the economic crisis, industry consolidation, imported grain prices, and continued competition from poultry imports.

 

Mexico lacks an equivalency agreement with USDA (Food Safety and Inspection Service) which would allow for the export of domestically produced poultry meat and egg products to the US, although efforts continue toward developing such an agreement.

 

Imports of frozen mechanically separated meat and cuts for further processing have declined, due to the volatility of the exchange rate. Although, another factor is the imposed import bans on products from regions of the US due to low-pathogenic bird flu outbreaks. This year exports from counties within Kentucky, Tennessee and Minnesota were banned from exporting product to Mexico.

 

For 2008, the Mexican poultry sector contributed the following to the Mexican economy: Poultry production generated 1.14 million jobs, from which 190,000 are direct and 950,000 are indirect. Poultry production represents 11.5 percent of the gross agricultural product.

 

The Mexican poultry sector produces the number one meat product, chicken, and is principally produced within 14 states. Chicken meat represents 92 percent of the total poultry production. Turkey meat production in Mexico is principally produced in the states of Chihuahua (25 percent) and Yucatan (21 percent). These two states account for approximately 46 percent of the total turkey meat production of Mexico.

 

Poultry producers continue to be major users of imported feedstuffs from the US. According to the Mexican Poultry Producers Association (UNA), feed consumption for 2008 was estimated at 13.7 million tonnes. UNA estimates that feed consumption will grow about 1.5 percent in 2009. Furthermore, chicken meat production consumed 7.6 million tonnes of feed while turkey production consumed 52,000 tonnes.

 

The second semester of 2009 is expected to be difficult for the poultry sector due to the economic crisis, lower family income and the instability of the exchange rate. About 65-70 percent of the cost of production in Mexico is tied to the dollar; thus, the devaluation of the peso directly affects the profitability of the sector. Feed costs in Mexico represented approximately 67 percent of the total cost of production.

 

Mexican chicken meat production is forecast to increase 2.5 percent in 2010. This forecast is dependent on the dollar exchange rate, the recovery from economic crisis, and exports. 2009 production was revised 0.5-percent higher than the previous forecast. Overproduction is expected to occur in the second half of 2009 due to improvements in productivity which has occurred over the recent past.

 

Industry consolidation is expected to continue. Furthermore, the industry continues to invest in infrastructure despite the economic down town. More consolidation is taking place in an effort to cope with high input prices. In 2008, three leading companies accounted for 55 percent of total domestic production of chicken meat. Medium-size companies will likely merge into cooperatives and associations, with smaller players becoming contract producers.