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THE MEXICAN POULTRY INDUSTRY AND THE NAFTA

THE MEXICAN POULTRY INDUSTRY AND THE NAFTA. FIRST ANNUAL NORTH AMERICAN AGRIFOOD MARKET INTEGRATION WORKSHOP. Cesar de Anda Cancún, México May 6 - 7, 2004. Performance of Poultry Industry. Situation before NAFTA  Transition period Free Trade Conclusions.

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THE MEXICAN POULTRY INDUSTRY AND THE NAFTA

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  1. THE MEXICAN POULTRYINDUSTRY AND THE NAFTA FIRST ANNUAL NORTH AMERICAN AGRIFOOD MARKET INTEGRATION WORKSHOP Cesar de Anda Cancún, México May 6 - 7, 2004

  2. Performance of Poultry Industry • Situation before NAFTA  • Transition period • Free Trade • Conclusions

  3. The relationship before NAFTA • Commercial exchange with not clear rules • Restrictions determined by the government • Continues changes • United States exported poultry products to the mexican market

  4. Before NAFTA • Differences between Mexican and US Industries (1990): • Scale of Production: • Poultry industry 7.6 times bigger in US than Mexico • Egg 3.6 times bigger in US than Mexico • Turkey 217.3 times bigger in US than Mexico • Pattern of consumption has an impact on the prices of products • Access to raw materials had a direct impact on costs

  5. Performance of Poultry Industry • Situation before NAFTA • Transition period 

  6. What means NAFTA ? • Clear rules • Obligations for both countries • Trade and more trade • Dispute mechanism

  7. Transition period CHICKEN MEAT PRODUCTION AYG (94/02) = 5.7 % Million Tons

  8. Transition period SHELL EGG PRODUCTION AYG (94/02) = 4.3% Million Tons

  9. Transition period TURKEY MEAT PRODUCTION TONS AYG (94/02) = 8.2 %

  10. Transition period

  11. Transition period • Considering all those factors, Mexico is: • The fourth producer of chicken meat worldwide • The sixth producer of shell egg worldwide

  12. Transition period • With the NAFTA the US industry consolidated its position like main supplying of poultry products to the Mexican market: • 99 % of the imports of poultry meat products are from USA • 98 % of the egg products are from USA • 80 % of the egg for hatching and live chickens are from USA

  13. Imports • Final imports of chicken meat (thousand tons) • Evolution of the AYG: • 1996 to 2001 was 14% • 1996 to 2002 was 11% • 2001 to 2002 was - 2.7% • 2002 to 2003 was - 10.6% • In average, from 1996 to the year 2002, imports of chicken meat represent 6% of national production • 100% of the imports are for the border zone

  14. Imports • Final imports of fresh egg (tons) • Evolution of theAYG: • 1996 to 2001 was 1.8% • 1996 to 2002 was 3.3% • 2001 to 2002 was10.8% • 2002 to 2003 was - 17.2% • 90% of imports belong to fertile egg • In 2003 only 17 tons of fresh egg were imported

  15. Imports • Final imports of turkey meat (thousand tons) • Evolution of AYG: • 1996 to 2001 was 10% • 1996 to 2002 was 4.3% • 2001 to 2002 was - 20.8% • 2002 to 2003 was 43.3% • There has been an increase on imports of pieces by the inlay industry and imports of turkey legs by roasteries.

  16. Performance of Poultry Industry • Situation before NAFTA • Transition period • Free trade 

  17. Free Trade Facts • Access to raw materials • Mexico is not self sufficient in grains • 40% comes from local market • 60% comes imports • Poultry market is open to free trade and yellow corn will be liberalized in 4 years • This generates a real negative protection • Technology on the Industry • In the US, 90% of the plants have further processes: • nuggets, ready to cook meals, etc. • In Mexico just starting up

  18. Industry Performance in 2003 • In 2003 poultry industry produced 4.24 million tons • 1.9 million tons of table eggs • 2.3 million tons of chicken meat • 13.7 thousand tons of turkey meat • Total value of production was almost $4.5 billion dollars

  19. RELATIONSHIP WITHTHE USINDUSTRY A friendly relationship has always existed It has strengthened during the last years In 1999 UNA proposed to create a mechanism to talk officially with their counterparts the NAFTA Egg & Poultry Partnership (NEPP) was borned in October 2000

  20. Free Trade Objectives ofNEPP: • Be a mechanism to discuss and analize problems of the industries • Create a forum for mutual understanding and cooperation • Create task groups to discuss, analize and solve issues on: • Consumption • Free trade barriers • Sanitary policies • Trade disputes

  21. Free Trade Safeguard on chicken quarters: • Meetings to analyze impact since 2001 • Common solution UNA and USAPEEC: • mechanism to protect mexican industry on certain products • Intense lobbying through 2001 and 2002 with: • Federal Government • Mexican representatives abroad • US Authorities • Industries

  22. Performance of Poultry Industry • Situation before NAFTA • Transition period • Free trade • Conclusions 

  23. Conclusions • The transition period and the rules of the NAFTA have evidenced that the markets of United States and Mexico are complementary • United States consumes Breast and wings • Mexico consumes Leg quarters • Mexico needs of the agricultural inputs and egg for hatching and live birds of breeding of United States • Mexico offers to United States, workforce cheap, beneficent weather for the production

  24. Conclusions • In both industries, USAPEEC and UNA, has the vision of integrating a poultry market of North America (Mexico, United States and Canada), this will allow : • To be more competitive in front of the Brazilian industry • To supplement the export areas for the attention of common markets • To have poultry production in the three countries • To maintain the growth of the industry

  25. THANKS

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