Required Report - public distribution

**Date:** 8/05/2005

**GAIN Report Number:** MX5067

MX0000

**Mexico**

Tree Nuts

**Annual Report**

2005

**Approved by:**

![](media/image1.wmf)Suzanne E. Heinen

#### U.S. Embassy Mexico City

**Prepared by:**

Sal Trejo

**Report Highlights:**

Mexican pecan nut production is projected to increase in 2006/07 due to
the increase in area planted to pecan trees, as water shortages of the
past few years have encouraged farmers to look for less water intensive
crops, and because of strong demand and attractive prices for pecans
over the past years. Exports are also projected to rise in 2006/07 as
more trees come into production.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Mexico \[MX1\]

\[MX\]

Table of Contents

Executive Summary
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Production
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Consumption
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Trade
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Stocks
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Marketing
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Tables
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# Executive Summary

Pecan nuts are the principal tree nut crop grown in Mexico. The pecan
tree is native to North America and is typically harvested from October
to December. Most of Mexico's pecan nuts are grown in northern Mexico in
the states of Chihuahua, Sonora, Coahuila, Nuevo Leon and Durango, where
the weather is dry and cold during the winter months. Some plantings
also exist in central Mexico. Chihuahua state has traditionally produced
the largest volumes; moreover, newer areas in northern Mexico are
increasing the proportion of total production grown in this region.

According to industry figures, the number of pecan growers in Mexico is
currently estimated around 900. The number of commercially bearing pecan
trees in Mexico is estimated at around 3.4 million, covering an area of
about 62,809 hectares.

Mexico has been producing pecan nuts in commercial quantities since
1954, when approximately 2,600 MT were produced. Production has grown
steadily over the years, reaching 68,279 MT in 2004/05, with exports
comprising over 75 percent of total production.

Weather conditions have remained favorable for the 2005/06 crop, with
recent months registering average rainfall. According to SAGARPA,
production in 2004/05 was slightly affected by drought conditions that
affected all of northern Mexico from the mid-nineties until last year.
However, climatic data from SAGARPA shows key pecan nut growing areas
have had average rainfall during the growing season of the 2005/06 crop.
The Secretariat of Agriculture (SAGARPA) and industry sources report
excellent soil moisture conditions and suggest that these favorable
moisture conditions are likely to carry over into the 2006/07 crop.

# Production

Area planted to pecan trees has increased considerably for 2004/05 and
2005/06 from our previous estimates and is expected to continue
increasing in 2006/07. Many farmers throughout northern Mexico suffered
from the effects of the drought years, and many fearing a continued
drought, reverted to less water intensive crops. Pecan orchards
attracted the interest of some of these farmers, because of the
favorable yearly prices on the international and domestic market.
Therefore, some farmers dedicated part of their land to growing pecans
and other crops requiring less water than their traditional crops such
as wheat, corn, and cotton. Area planted to pecans for 2006/07 is
forecast at 64,256 ht. Our estimate for 2005/06 is revised upward 11.2
percent from our previous estimate and the estimate for 2004/05 is
revised to reflect official data.

Post forecasts pecan nut production in 2006/07 to reach 69,500 MT
in-shell basis, up slightly from the 68,800 MT estimate for the previous
year and slightly over the 2004/05 crop of 68,279 MT. Improved soil
moisture conditions associated with the dissipating drought are expected
to result in yield increases, with an incremental increase in tree
numbers also boosting production. For 2004/05, the production estimate
has been revised upward reflecting official data.

# 

# Consumption

Domestic consumption is very price elastic. Consumption goes up when
prices are low. Retail outlets, confectioners, bakeries and food
processors are the largest consumers of Mexican grown pecans after the
export market. There is also a significant informal market for in-shell
pecans, especially during the Christmas holidays. Christmas is the most
important consumption season for pecans.

Mexican pecan nut consumption for MY 2006 is projected at 32,000 MT,
unchanged from our revised estimate of MY 2005 as the increased
production estimated for MY 2005 and MY 2006 is expected to enter the
export market. Official up-to-date statistics on pecan nut consumption
are unavailable. Figures quoted by Post are derived from production and
export numbers and commentary from producers and industry.

## 

# Trade

Exports

Due to increased planted area and new trees that went into production
for 2004/05, and the new trees coming into production for 2005/06, in
addition to the expected increase of new trees in 2006/07, post is
forecasting total pecan nut exports for 2006/07 at 52,500 MT, slightly
up from the previous year's estimate. The increase in forecast
production is expected to drive exports higher. Excellent growth
potential for exports to markets such as Japan and Europe may divert
tonnages to these destinations at the expense of the United States,
which has been Mexico's traditional market since Mexico began producing
pecans commercially.

Total pecan exports for 2005/06 are estimated at 51,800 MT, up 11.4
percent from post's previous estimate due to the relatively high
production and strong international demand. Total pecan exports for
2004/05 are estimated at 51,796 MT, a 12 increase from post's previous
estimate. This increase is consistent with year-to-date SAGARPA export
data. Again, high production and international demand were the major
drivers of the increase in exports.

Imports

Due to Mexico's increased production of pecan nuts for 2004/05, 2005/06
and the expected increase for 2006/07, total imports of pecan nuts from
Mexico's only supplier, the United States, is forecast to continue
unchanged for 2006/07 from the previous year's revised estimate. Imports
for 2005/06 are revised downward much for the same reason as above.
Imports for 2004/05 are revised downward reflecting official data.

Prices

The price Mexican farmers receive for their Pecans is a function of the
U.S. market. If supply is tight in the U.S. market, prices will be high
in the Mexican market.

The price the farmer receives from pecan shellers is based on the
percent of kernel of the pecan. Improved varieties such as the Western,
which have around 55 percent kernel, receive a premium price, while
native varieties, which have around 40 percent kernel, receive a lower
price. Most of the pecans grown in northern Mexico are of the Western
and Wichita varieties.

The average price paid for Mexican pecans in 2004/05 was US\$2.78/kg.,
in-shell basis and US\$5.08/kg., shelled basis.

#### Stocks

For the most part there have been no stocks at the end of the marketing
year because the price of pecans was high enough to clear the market.
Also, there are not enough cold storage warehouses to store a
significant amount of pecans. Because of this lack of storage, the
market for pecans is saturated at production time (October through
December) and short of pecans later in the year.

# Marketing

U.S. tree nut exporters, new to the Mexican market, are encouraged to
contact the following trade organizations for further market
information.

+-----------------------------------------------------------------------+
| THE U.S. AGRICULTURAL TRADE OFFICE                                    |
|                                                                       |
| BRUCE ZANIN, DIRECTOR                                                 |
|                                                                       |
| JAIME BALMES NO. 8 - 2^ND^. FLOOR                                     |
|                                                                       |
| 11510 MEXICO, D.F.                                                    |
|                                                                       |
| PH. (525) 280-5291/5276; FAX. (525) 281-6093                          |
|                                                                       |
| bruce.zanin@usda.gov.                                                 |
+-----------------------------------------------------------------------+
| ASOCIACION NACIONAL DE FABRICANTES DE CHOCOLATES, DULCES Y SIMILARES, |
| A.C.                                                                  |
|                                                                       |
| (NATIONAL ASSOCIATION OF MANUFACTURERS OF CHOCOLATES, CANDY AND       |
| SIMILARS)                                                             |
|                                                                       |
| MANUEL MARIA CONTRERAS NO. 133-301                                    |
|                                                                       |
| COL. CUAUHTEMOC, MEXICO 06500, D.F.                                   |
|                                                                       |
| PH. (525) 5546-1259, 5546-0974; FAX. (525) 5592-2497                  |
+-----------------------------------------------------------------------+
| CAMARA NACIONAL DE INDUSTRIA PANIFICADORA Y SIMILARES (CANAINPA)      |
|                                                                       |
| (NATIONAL CHAMBER OF THE BAKING AND CONFECTIONARY INDUSTRY)           |
|                                                                       |
| DR. LICEAGA NO. 96                                                    |
|                                                                       |
| COL. DOCTORES, MEXICO 06720, D.F.                                     |
|                                                                       |
| PH. (525) 5578-9277, 5578-9288; FAX. (525) 5761-8924                  |
+-----------------------------------------------------------------------+
| CAMARA NACIONAL DE LA INDUSTRIA DE TRANSFORMACION (CANACINTRA)        |
|                                                                       |
| (NATIONAL CHAMBER OF THE TRANSFORMATION INDUSTRY)                     |
|                                                                       |
| SAN ANTONIO NO. 256                                                   |
|                                                                       |
| COL. AMPLIACION NAPOLES                                               |
|                                                                       |
| MEXICO 03849, D.F.                                                    |
|                                                                       |
| PH. (525) 5563-3400, 5563-3000; FAX. (525) 5598-9467                  |
+-----------------------------------------------------------------------+
| ASOCIACION NACIONAL DE TIENDAS DE AUTOSERVICIO Y DEPARTAMENTALES,     |
| A.C. (ANTAD)                                                          |
|                                                                       |
| (NATIONAL ASSOCIATION OF SUPERMARKETS AND DEPARTMENT STORES)          |
|                                                                       |
| AV. HORACIO 1855, 6TH FLOOR                                           |
|                                                                       |
| COL. CHAPULTEPEC MORALES                                              |
|                                                                       |
| 11570 MEXICO, D.F.                                                    |
|                                                                       |
| \(525\) 5580-1772; FAX. (525) 5395-2610                               |
+-----------------------------------------------------------------------+

**Tables**

#### PS&D, Pecans, In-shell Basis

(Hectares, Metric Tons, Trees)

+--------------------+-------+-------+-------+-------+-------+-------+
| #### PSD Table     |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| **Country**        | #     |       |       |       |       |       |
|                    | ### M |       |       |       |       |       |
|                    | exico |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| **Commodity**      | #     |       |       |       |       |       |
|                    | ### P |       |       |       |       |       |
|                    | ecan, |       |       |       |       |       |
|                    |  In-s |       |       |       |       |       |
|                    | hell  |       |       |       |       |       |
|                    | basis |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
|                    | **2   |       | **2   |       | **2   |       |
|                    | 004** |       | 005** |       | 006** |       |
+--------------------+-------+-------+-------+-------+-------+-------+
|                    | Old   | New   | Old   | New   | Old   | New   |
+--------------------+-------+-------+-------+-------+-------+-------+
| Market Year Begin  | 10/04 |       | 10/05 |       | 10/06 |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| Area Planted       | 56165 | 61168 | 56500 | 62809 |       | 64256 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Area Harvested     | 53545 | 58111 | 55000 | 60800 |       | 61500 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Bearing Trees      | 32    | 32    | 33    | 33    |       | 33    |
|                    | 50000 | 50000 | 00000 | 00000 |       | 50000 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Non-Bearing Trees  | 1     | 1     | 1     | 1     |       | 1     |
|                    | 40000 | 44000 | 40000 | 45000 |       | 48000 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Total Trees        | 33    | 33    | 34    | 34    |       | 34    |
|                    | 90000 | 94000 | 40000 | 45000 |       | 98000 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks   | 0     | 0     | 0     | 0     |       | 0     |
+--------------------+-------+-------+-------+-------+-------+-------+
| Production         | 66000 | 68279 | 68000 | 68800 |       | 69500 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Imports            | 16000 | 14788 | 16000 | 15000 |       | 15000 |
+--------------------+-------+-------+-------+-------+-------+-------+
| #### TOTAL SUPPLY  | 82000 | 83067 | 84000 | 83800 |       | 84500 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Exports            | 46215 | 51796 | 46500 | 51800 |       | 52500 |
+--------------------+-------+-------+-------+-------+-------+-------+
| Domestic           | 35785 | 31271 | 37500 | 32000 |       | 32000 |
| Consumption        |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks      | 0     | 0     | 0     | 0     |       | 0     |
+--------------------+-------+-------+-------+-------+-------+-------+
| **TOTAL            | 82000 | 83067 | 84000 | 83800 |       | 84500 |
| DISTRIBUTION**     |       |       |       |       |       |       |
+--------------------+-------+-------+-------+-------+-------+-------+

Note: Conversion factor used from shelled to in-shell basis, 2.00

**Trade Matrix**

+-------------+---------+---------+-------------+---------+---------+
| **Pecans,   |         |         | ###         |         |         |
| In Shell**  |         |         | ### UNITS:  |         |         |
|             |         |         | Metric Tons |         |         |
+-------------+---------+---------+-------------+---------+---------+
| Exports to: | *       | **2     | Imports to: | *       | **2     |
|             | *2004** | 005\*** |             | *2004** | 005\*** |
+-------------+---------+---------+-------------+---------+---------+
| U.S.        | 31468   | 5259    | U.S.        | 14492   | 4483    |
+-------------+---------+---------+-------------+---------+---------+
| Others not  | 0       | 0       | Others not  | 0       | 0       |
| listed      |         |         | listed      |         |         |
+-------------+---------+---------+-------------+---------+---------+
| Grand Total | 31468   | 5259    | Grand Total | 14492   | 4483    |
+-------------+---------+---------+-------------+---------+---------+

+-------------+---------+---------+-------------+---------+---------+
| **Pecans,   |         |         | ###         |         |         |
| Shelled**   |         |         | ### UNITS:  |         |         |
|             |         |         | Metric Tons |         |         |
+-------------+---------+---------+-------------+---------+---------+
| Exports to: | *       | **2     | Imports to: | *       | **2     |
|             | *2004** | 005\*** |             | *2004** | 005\*** |
+-------------+---------+---------+-------------+---------+---------+
| U.S.        | 10164   | 7294    | U.S.        | 148     | 107     |
+-------------+---------+---------+-------------+---------+---------+
| Others not  | 0       | 0       | Others not  | 0       | 0       |
| listed      |         |         | listed      |         |         |
+-------------+---------+---------+-------------+---------+---------+
| Grand Total | 10164   | 7294    | Grand Total | 148     | 107     |
+-------------+---------+---------+-------------+---------+---------+

SOURCE: US Trade Data from Customs

NOTE: \* Indicates that figures are fro January thru May