Mexico Agribusiness Report Q3 2009 : Market Research Report

Mexico Agribusiness Report Q3 2009

Published by: Business Monitor International

Published: Jun. 29, 2009 - 63 Pages

Executive Summary: SWOT Analysis; Mexico Agricultural SWOT; Industry Business Environment Overview; Market Overview; Supply Demand Analysis; Mexico Sugar Outlook
Table: Mexico Sugar Production, Consumption & Trade
Table: Mexico Sugar Production, Consumption & Trade: Industry Forecast - Mexico Coffee Outlook
Table: Mexico Coffee Production, Consumption & Trade
Table: Mexico Coffee Production, Consumption & Trade: Industry Forecast - Mexico Dairy Outlook
Table: Mexico Milk Production & Consumption
Table: Mexico Butter Production, Consumption & Trade
Table: Mexico Cheese Production, Consumption & Trade
Table: Mexico Whole Milk Powder Production, Consumption & Trade
Table: Mexico Milk Production, Consumption & Trade
Table: Mexico Butter Production, Consumption & Trade
Table: Mexico Cheese Production, Consumption & Trade
Table: Mexico Whole Milk Powder Production, Consumption & Trade: Industry Forecast - Mexico Grain Outlook
Table: Mexico Wheat Production, Consumption & Trade
Table: Mexico Corn Production, Consumption & Trade
Table: Mexico Barley Production, Consumption & Trade
Table: Mexico Sorghum Production, Consumption & Trade
Table: Mexico Wheat Production, Consumption & Trade
Table: Mexico Corn Production, Consumption & Trade
Table: Mexico Barley Production, Consumption & Trade
Table: Mexico Sorghum Production, Consumption & Trade: Industry Forecast - Mexico Livestock Outlook
Table: Mexico Poultry Production, Consumption & Trade
Table: Mexico Pork Production, Consumption & Trade
Table: Mexico Beef & Veal Production, Consumption & Trade
Table: Mexico Poultry Production, Consumption & Trade
Table: Mexico Pork Production, Consumption & Trade
Table: Mexico Beef & Veal Production, Consumption & Trade: Industry Forecast - Mexico Rice Outlook
Table: Mexico Rice Production, Consumption & Trade
Table: Mexico Rice Production, Consumption & Trade: Industry Forecast - Mexico Rice Outlook
Table: Mexico Soybean Production, Consumption & Trade
Table: Mexico Soybean Production, Consumption & Trade: Competitive Landscape
Table: Agricultural Commodity Producers & Traders
Table: Agribusiness Suppliers
Table: Integrated Agricultural Producers: Market Strategy - Grains Update; Corn
Table: Corn: Soybean
Table: Soybean: Rice
Table: Rice: Wheat
Table: Wheat: Market Strategy Softs Update; Cocoa
Table: Cocoa: Coffee
Table Coffee: Milk
Table: Milk: Sugar
Table: Sugar: Downstream Supply Chain Analysis; Industry Forecast Scenario - Food; Food Consumption; Mexico Food Consumption Indicators -- Historical Data & Forecasts; Trade
Table: Food & Drink Trade Balance -- Historical Data & Forecasts: Confectionery
Table: Confectionery Sales -- Historical Data & Forecasts: Prepared Food / Canned Food
Table: Canned Food Sales - Historical Data & Forecasts: Industry Forecast Scenario - Drink; Hot Drinks; Hot Drink Sales - Historical Data & Forecasts; Alcoholic Drinks; Alcoholic Drink Sales/Production - Historical Data & Forecasts; Soft Drinks; Soft Drink Sales - Historical Data & Forecasts; Economic Activity
Table: Mexico - Economic Activity: Company News Alert - Imperial, Santos Expand Reach Of Joint Venture; BMI Forecast Modelling; How We Generate Our Industry Forecasts

Abstract

In BMI's Mexico Agribusiness Report for Q3 2008 we introduce two new outlooks, rice and soybean.Production of the two crops has followed a very similar pattern over the past few decades. Output of bothrice and soybeans rose though much of the 1980s, but fell off abruptly in the mid-1990s. The cause for thesudden collapse in production of the crops was the liberalisation of Mexico's agricultural sector inpreparation for the implementation of the North American Free Trade Agreement (NAFTA), which wassigned in 1994.

Price supports for agricultural commodities were cut back and farmers were forced to face the vagaries ofthe market. Many found that without government protection, production just wasn't profitable. As tariffson imports from the US were gradually eased to zero in the 10 years following the signing of the treaty,imports from the North took the place of domestic production. For both rice and soybean, Mexicanfarmers found they were unable to compete on price with crops grown in the US. Production dwindled.

Soybean production was hit especially hard, dropping from almost 1mn tonnes in 1990 to 100,000 tonnesa decade later. After hitting a nadir of 81,000 tonnes in 2006 and 2007 production rose up to 89,000tonnes in 2008. In 2009, we forecast production to rise to 153,000 tonnes. We do not believe that outputwill rise back to its 1990 peak in the foreseeable future. Production in Mexico is just too expensive incomparison to in the US, where much less irrigation is required. However, we do expect something of aturnaround in soybean production. This will be encouraged by a return of government assistance to thesector. Subsidies for diesel and electricity have been increased and some price supports have beenreintroduced.

The biggest story in Mexican agribusiness this past quarter has been the outbreak of H1N1 'swine flu'.

Despite assurances from the World Organization for Animal Health (OIE) and the UN Food andAgriculture Organization that the virus cannot be caught from eating pork, demand for the meat collapsedat home. Countries around the world also slapped import bans on Mexican pork.

We had already expected demand for pork to be sluggish in 2009 owing to the poor state of the Mexicaneconomy - BMI is now forecasting Mexico's GDP to contract 7.1% in 2009. The flu outbreak will addfurther woe to producers already suffering under the strain of high feed costs and slow demand. Thefederal government in May announced MXN1.1bn (US$83mn) in support to the pork industry to helpproducers recover from the outbreak, but many will still be forced out of the sector.

In the longer term, we do not see the flu having a lasting impact on Mexico's pork production. Unlike thedevastating outbreaks of avian flu across Asia and other parts of the world earlier this decade, there havebeen no enforced culls of animal stock. Once the hysteria has passed and the economy begins to recover,we believe demand will return strongly.

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Mexico Agribusiness Report Q3 2009

Table of Contents

Abstract