""

Required Report - public distribution

**Date:** 7/10/2003

**GAIN Report Number:** MX3093

M

X3093

**Mexico**

**Planting Seeds**

**Annual**

**2003**

**Approved by:**

![](media/image1.wmf)William L. Brant

#### U.S. Embassy Mexico City

**Prepared by:**

Sal Trejo/Gabo Hernandez

**Report Highlights:**

**Total Mexican planting seed imports were valued at over \$389 million
in 2002, up considerably from \$222 million the previous year. The U.S.
captured 70 percent of Mexico's seed imports, exporting \$272 million
worth of seeds to Mexico in 2002.**

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Mexico \[MX1\]

\[MX\]

Table of Contents

SECTION I. SITUATION AND OUTLOOK Page 3 of 8

Planting Seed Situation and Outlook Page 3 of 8

SECTION II. STATISTICAL TABLES Page 4 of 8

Mexico's Imports by Planting Seed Groups Page 4 of 8

Mexico's Exports by Planting Seed Groups Page 5 of 8

SECTION III. NARRATIVE ON SUPPLY, DEMAND, POLICY & MARKETING Page 6 of 8

PRODUCTION Page 6 of 8

TRADE Page 6 of 8

POLICY Page 6 of 8

MARKETING Page 7 of 8

***SECTION I. SITUATION AND OUTLOOK***

**Planting Seed Situation and Outlook:** Worldwide, Mexican planting
seed imports totaled US\$ 389 million in 2002, compared to US\$222
million in CY2001. U.S. planting seed exporters captured 70 percent of
Mexico's seed imports, exporting US\$ 272 million worth of planting
seeds to Mexico. The current Mexican economy and demand for food are the
main driving force behind increasing demand for seeds, along with the
rapid shift of farmers to hybrid seeds over the past several years in
order to obtain a higher quality, more uniform, and more stable product.
Additionally, seed exports from the United States to Mexico are helped
by the seed and variety regulations that lower restrictions on seed
trade. Furthermore, the variety regulation gives plant breeders more
protection in Mexico and the phytosanitary regulations for the
importation of seeds have improved access to the Mexican seed market.
Mexico's planting seed exports have decreased due to increased demand
from the domestic farming community. Mexican exports for CY2002 totaled
US\$11 million compared to CY2001 exports of US\$9 million.

Concerns about the use of biotechnology in seed production continue to
receive wide coverage in the Mexican media. Press propaganda fed by
anti-GMO non-governmental organizations have led to consumer campaigns
against biotechnologically-enhanced foods and crops.

Nevertheless, Mexico is expected to remain an attractive market for U.S.
seed exports in the coming years. Maintaining U.S. sales levels to
Mexico will require staying ahead of competitors in terms of developing
and introducing new varieties to solve agronomic problems found in
Mexico.

***SECTION II. STATISTICAL TABLES***

Mexico's Imports by Planting Seed Groups

Calendar Year

(U.S.Dollars and Metric Tons)

+----------------------------+-----------+--------+-----------+-------+
| Commodity &                | 2001      |        | 2002      |       |
|                            |           |        |           |       |
| Country of Origin          |           |        |           |       |
+----------------------------+-----------+--------+-----------+-------+
|                            | Value     | Volume | Value     | V     |
|                            |           |        |           | olume |
+----------------------------+-----------+--------+-----------+-------+
| Grass Seeds                | 8,378,470 | 7,602  | 5         | 4     |
|                            |           |        | 4,083,908 | 3,425 |
| U.S.A.                     | 6,410,788 | 6,727  |           |       |
|                            |           |        | N/A       | N/A   |
| Others                     | 1         | 14,329 |           |       |
|                            | 4,789,258 |        | 5         | 4     |
| Total                      |           |        | 4,083,908 | 3,425 |
+----------------------------+-----------+--------+-----------+-------+
| Leguminous Vegetable Seeds | 2,590793  | 4,347  | 4,101,986 | 7,925 |
|                            |           |        |           |       |
| U.S.A.                     | 480,712   | 1,175  | 216,280   | 418   |
|                            |           |        |           |       |
| Others                     | 3,071,505 | 5,522  | 4,318,266 | 8,343 |
|                            |           |        |           |       |
| Total                      |           |        |           |       |
+----------------------------+-----------+--------+-----------+-------+
| Other Vegetable Seeds      | 7         | 11,783 | 7         | 1     |
|                            | 3,337,208 |        | 1,201,828 | 1,774 |
| U.S.A.                     |           | 826    |           |       |
|                            | 5,816,571 |        | 1         | 2,092 |
| Others                     |           | 12,609 | 2,650,342 |       |
|                            | 7         |        |           | 1     |
| Total                      | 9,153,779 |        | 8         | 3,866 |
|                            |           |        | 3,852,170 |       |
+----------------------------+-----------+--------+-----------+-------+
| Field Crop Seeds           | 9         | 2      | 12        | 48    |
|                            | 6,483,329 | 79,818 | 8,986,310 | 2,906 |
| U.S.A.                     |           |        |           |       |
|                            | 1         | 62,984 | 9         | 35    |
| Others                     | 1,069,666 |        | 3,578,743 | 0,359 |
|                            |           | 3      |           |       |
| Total                      | 10        | 42,802 | 22        | 83    |
|                            | 7,552,995 |        | 2,565,053 | 3,265 |
+----------------------------+-----------+--------+-----------+-------+
| Other Seeds                | 2,226,389 | 416    | 4,464,735 | 822   |
|                            |           |        |           |       |
| U.S.A.                     | 4,606,137 | 794    | 8,494,805 | 1,564 |
|                            |           |        |           |       |
| Others                     | 6,832,526 | 1,210  | 1         | 2,386 |
|                            |           |        | 2,959,540 |       |
| Total                      |           |        |           |       |
+----------------------------+-----------+--------+-----------+-------+
| Other Forage Seeds         | 9,264,086 | 4,626  | 9,590,654 | 5,164 |
|                            |           |        |           |       |
| U.S.A.                     | 1,245,290 | 622    | 789,456   | 425   |
|                            |           |        |           |       |
| Others                     | 1         | 5,248  | 1         | 5,589 |
|                            | 0,509,376 |        | 0,380,110 |       |
| Total                      |           |        |           |       |
+----------------------------+-----------+--------+-----------+-------+

SOURCE: U.S. Bureau of the Census trade data and data from Bancomext.

Mexico's Exports by Planting Seed Groups

Calendar Year

(U.S. Dollars and Metric Tons)

+--------------------------+-----------+--------+-----------+--------+
| **Tariff No. Commodity   | **2001**  |        | **2002**  |        |
| &**                      |           |        |           |        |
|                          |           |        |           |        |
| **Country of             |           |        |           |        |
| Destination**            |           |        |           |        |
+--------------------------+-----------+--------+-----------+--------+
|                          | **Value** | **Vo   | **Value** | **Vo   |
|                          |           | lume** |           | lume** |
+--------------------------+-----------+--------+-----------+--------+
| Grass Seeds              | 156,536   | 352    | 108,430   | 300    |
|                          |           |        |           |        |
| U.S.A.                   | 412,225   | 275    | 352,687   | 202    |
|                          |           |        |           |        |
| Others                   | 568,761   | 627    | 461,117   | 502    |
|                          |           |        |           |        |
| Total                    |           |        |           |        |
+--------------------------+-----------+--------+-----------+--------+
| Leguminous Vegetable     | 132,636   | 178    | 94,989    | 137    |
| Seeds                    |           |        |           |        |
|                          | 216,445   | 365    | 308,109   | 377    |
| U.S.A.                   |           |        |           |        |
|                          | 349,081   | 543    | 403,098   | 514    |
| Others                   |           |        |           |        |
|                          |           |        |           |        |
| Total                    |           |        |           |        |
+--------------------------+-----------+--------+-----------+--------+
| Other Vegetable Seeds    | 5,245,397 | 52,923 | 7,094,823 | 23,000 |
|                          |           |        |           |        |
| U.S.A.                   | 94,744    | 36,362 | 339,542   | 1,101  |
|                          |           |        |           |        |
| Others                   | 5,340,141 | 89,285 | 7,434,365 | 24,101 |
|                          |           |        |           |        |
| Total                    |           |        |           |        |
+--------------------------+-----------+--------+-----------+--------+
| Field Crop Seeds         | 325,928   | 1      | 167,776   | 278    |
|                          |           | 38,963 |           |        |
| U.S.A.                   | 282,914   |        | 1,321,293 | 1,555  |
|                          |           | 81,396 |           |        |
| Others                   | 608,842   |        | 1,489,069 | 1,835  |
|                          |           | 2      |           |        |
| Total                    |           | 20,359 |           |        |
+--------------------------+-----------+--------+-----------+--------+
| Other Seeds              | 1,103,936 | 147    | 973,668   | 182    |
|                          |           |        |           |        |
| U.S.A.                   | 1,152,117 | 19     | 589,802   | 34     |
|                          |           |        |           |        |
| Others                   | 2,256,053 | 166    | 1,563,470 | 216    |
|                          |           |        |           |        |
| Total                    |           |        |           |        |
+--------------------------+-----------+--------+-----------+--------+
| Other Forage Seeds       | 31,195    | 13     | 4,014     | 4      |
|                          |           |        |           |        |
| U.S.A.                   | 2,470     | 5      | 33,758    | 18     |
|                          |           |        |           |        |
| Others                   | 33,665    | 18     | 37,772    | 22     |
|                          |           |        |           |        |
| Total                    |           |        |           |        |
+--------------------------+-----------+--------+-----------+--------+

SOURCE: U.S. Bureau of the Census trade data and data from Bancomext.

**SECTION III. NARRATIVE ON SUPPLY AND DEMAND, POLICY & MARKETING**

PRODUCTION

The Mexican seed industry is made up of individual farmers, large
multinational companies, national private seed companies, the government
seed company PRONASE, national public research and seed production
organizations such as INIFAP, and international agricultural research
centers such as CIMMYT (The International Maize and Wheat Improvement
Center).

In the past, private companies were heavily regulated. Companies were
limited to seed production and marketing, with only a few companies
doing breeding. Today, however, private companies can now participate in
any phase of the seed industry from seed production and conditioning to
seed marketing and distribution.

TRADE

U.S. seed exporters have captured more than 70 percent of the Mexican
market, maintaining the United States' status as Mexico\'s primary
source of imported seeds for sowing, a market valued at US\$389 million
in CY2002. The value of U.S. shipments exported to Mexico grew 41.6
percent from CY2001 to over US\$272.0 million in CY2002. The growth was
basically in vegetable seeds, field crop seeds and grass seeds.
Vegetable seeds accounted for 27.6 percent of Mexican seed imports from
the U.S., field crop seeds accounted for 47.3 percent, grass seeds
accounted for 19.8 percent and the remaining seed groups accounted for
5.1 percent of the total U.S. export value. In quantity terms, 2002
imports from the U.S. grew 78.8 percent from the previous year's total
of 308,666 metric tons, due mostly to the increased demand for grass
seed, vegetable and field crop seeds. According to reliable seed
industry sources, this increase in value and volume is fueled by the
imminent liquidation of the Mexican government seed company, Productora
Nacional de Semillas (PRONASE), which has not been producing planting
seeds for two years and is currently liquidating its seed inventory.
Furthermore, many domestic producers of planting seeds are no longer
producing seeds on their farms, as it is more economical to import seed
than to produce it domestically, due to high production costs.

POLICY

In broad terms, Mexico's seed policy requires that domestic seed sales
or imports and seeds exported from Mexico conform to prescribed
standards, and meet marking, labeling and packaging requirements. All
seed sold in Mexico for most crops, whether locally produced or
imported, must come from a registered variety. Only seed that has gone
through Mexico's established grading system may be sold by variety name.
Limiting access to the market for seed that does not conform to these
provisions helps to preserve attractive price levels.

Mexican Biosafety Bill

During its next legislative session, the Mexican Congress is set to vote
on a biosafety bill that seeks to regulate activities related to
confined use, experimental and commercial release, and commercialization
and import of genetically modified organisms (GMOs) in an effort to
prevent, avoid or reduce the possible risks these activities may have to
human health or the environment and biological diversity. Provisions of
the bill include the restructuring of the inter-agency commission on
biosafety and GMOs (CIBIOGEM), the establishment of a biosafety
clearinghouse and registry, the implementation of a permitting,
notification, and authorization process for all GMOs, the establishment
of certain areas as centers-of-origin or naturally protected areas in
which activities regarding GMO use will be limited or restricted, and
the establishment of a detailed list of infractions and sanctions for
those who violate the provisions set forth in the bill. It is a
framework bill wherein each ministry must issue its own regulations and
publish them in the Diario Oficial (Mexico's Federal Register). It thus
gives broad authority to the three ministries in charge of biosafety --
Agriculture (SAGARPA), Environment (SEMARNAT), and Health (SSA). With
the entry into force of the Biosafety Protocol on September 11, 2003,
the need to pass this bill during the Fall 2003 legislative session will
take on increasing urgency. The implications to U.S. grain and seed
trade are unclear. At present, biotech seeds only exist for field crops,
which comprise 87 percent and 47 percent in volume and value terms
respectively of all U.S. seed exports to Mexico.

MARKETING

Biotechnology will continue to drive the Mexican seed market in the
future. The evolving regulatory environment for biotech seed and their
crops will affect variety approval and marketing prospects, and U.S.
exporters should keep abreast of Mexican regulatory developments. As
consumer choice expands, consumer education about variety
characteristics will also play an important role in marketing seed.

U.S. exports of seeds to Mexico continue to be helped by the seed and
variety laws. The seed law has lowered restrictions on seed trade while
the variety law has given plant breeders more protection in Mexico. The
U.S. has long supplied the Mexican market with seeds. An important
factor influencing U.S. exports is farmer preference -- Mexican farmers
simply believe U.S. seeds are better.

Most seeds are imported and distributed by the large Mexican seed
companies, a number of which are owned by U.S. companies. The seed
companies in turn sell to dealers throughout the country and these in
turn sell to the farmers. Retailers, including the large supermarkets,
buy very little direct. They prefer to buy instead from the Mexican seed
companies, or if the volume is small, from local dealers.

U.S. seed exporters, new to the Mexican market, are encouraged to
contact the following trade organizations for further 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                          |
|                                                                       |
| <ZANINB@fas.usda.gov>                                                 |
+-----------------------------------------------------------------------+
| ASSOCIACION MEXICANA DE SEMILLEROS, A.C.                              |
|                                                                       |
| (MEXICAN SEED ASSOCIATION)                                            |
|                                                                       |
| AV. NUEVO LEON 209, DESP. 601/602                                     |
|                                                                       |
| COL. HIPODROMO CONDESA                                                |
|                                                                       |
| MEXICO, D.F. 06100                                                    |
|                                                                       |
| PH. (525) 516-0293/0957; FAX (525) 272-1775                           |
+-----------------------------------------------------------------------+
| SERVICIO NACIONAL DE INSPECCION Y CERTIFICACIÓN DE SEMILLAS (SNICS)   |
|                                                                       |
| (NATIONAL SERVICE FOR INSPECTION AND CERTIFICATION OF SEEDS)          |
|                                                                       |
| LOPE DE VEGA NO. 125 - 2^ND^. FLOOR                                   |
|                                                                       |
| COL. CHAPULTEPEC MORALES                                              |
|                                                                       |
| MEXICO, D.F. 11570                                                    |
|                                                                       |
| PH. (525) 203-9427; FAX (525) 250-6483                                |
|                                                                       |
| EDUARDO BENITEZ, DIRECTOR                                             |
+-----------------------------------------------------------------------+
| INSTITUTO NACIONAL DE INVESTIGACIONES FORESTALES, AGRICOLAS Y         |
| PECUARIAS (INIFAP) (GOVERNMENT SEED DEVELOPER)                        |
|                                                                       |
| SERAPIO RENDON NO. 83 - 2^ND^. FLOOR                                  |
|                                                                       |
| COL. SAN RAFAEL                                                       |
|                                                                       |
| 06470 MEXICO, D.F.                                                    |
|                                                                       |
| PH. (525) 140-1649, 140-1670; FAX. (525) 546-6801                     |
|                                                                       |
| <diegob@inifap2.inifap.conacyt.mx>                                    |
+-----------------------------------------------------------------------+

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