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Required Report - public distribution

**Date:** 8/20/2003

**GAIN Report Number:** MX3107

MX3111

**Mexico**

**Tree Nuts**

**Annual -- Revised**

**2003**

**Approved by:**

![](media/image1.wmf)David Williams

#### U.S. Embassy Mexico City

**Prepared by:**

Sal Trejo/Gabo Hernandez

**Report Highlights:**

Mexico's pecan production for MY 2004/05 is forecast to increase to
64,000 MT, approximately 0.7 percent more than the previous year's crop.
Due to new trees coming into production, and basically, only farmers
with orchards that have water wells continue to plant new trees.
Therefore, the majority of farmers are resorting more to quality inputs
such as better fertilizers and pesticides and better tree care in order
to improve production and nut quality.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Mexico \[MX1\]

\[MX\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Consumption 3](#consumption)

[Trade 3](#trade)

[Stocks 4](#stocks)

[Policy 4](#policy)

[Marketing 4](#marketing)

Tables..........................................................................................................................5

# Executive Summary

Pecan production for MY2004/05 (October-September) is forecast to
increase to 64,000 MT, or about 0.7 percent over the MY2003/04
production estimate. This increase is based on expected new trees coming
into production and improved cultural practices, timely fertilizer
applications, drip water irrigation systems, and pruning. For MY2003/04,
our previous estimate remains unchanged. The production estimate for
MY2002/03 also remains unchanged to reflect final official data.

Mexican pecan exports are forecast to increase in MY2004/05 to around
49,500 MT because of the traditional attractive export prices in the
international market, basically in the United States market. The export
estimate for MY2003/04 is revised upward from our previous estimate, due
to continued growing demand from the export market. The export estimate
for MY2002/03 is revised upward to reflect final official data.

NOTE: PS&D import and export figures are based on official Mexican trade
data and information from domestic traders, and frequently differ from
official U.S. trade data.

# Production

Post forecasts an increase in production for MY2004/05, due to expected
new trees coming into production, improvement in tree-care inputs, such
as fertilizers and timely pruning. Production in MY2003/04 is expected
to remain unchanged from our previous estimate.

The total crop area planted to pecan trees in Mexico is currently 53,500
hectares, the majority of which are located in the states of Chihuahua,
Coahuila, Durango, Sonora and Nuevo Leon. Currently, only farmers who
have water wells on their property are planting new trees. Due to scarce
water supplies caused by the dry conditions in several pecan-producing
states, many farmers have resorted to improved cultural practices and
increased input utilization to improve production yields and nut
quality. Pecans are harvested in Mexico from October to December.

# Consumption

## Domestic consumption is very price elastic; consumption rises quickly when prices are low and falls when prices are high. For MY2004/05, consumption is expected to reach 32,500 metric tons, due to accessible prices, general population growth, and the end of year holiday season when demand is higher. Consumption for MY2003/04 is revised upward from the previous estimate, due to continued demand from the domestic confectionary and baking industries. Next to the export market, domestic confectionery, bakeries and food processors are expected to remain the largest consumers of Mexican pecans.

# 

# Trade

Post forecasts an increase in exports for MY2004/05, due to the
traditional export market in the United States where attractive prices
and higher demand for Mexican pecans prevail year-round, unlike in the
domestic market. Mexican pecan exports are estimated upward from our
previous estimate of 34,000 MT in MY2003/04, due to continued attractive
prices in the export markets. As usual, the highest quality production
will be exported to the United States.

Mexican pecan imports are forecast to increase to 18,000 MT in
MY2004/05, 5.2 percent more than our previous revised estimate for
MY2003/04 of 17,100 MT. These increases in imports are caused by
temporary imports of inshell pecans to the Mexican border area for
shelling by shelling plants located at the border and then re-exported
to the United States. Industry sources indicate that approximately 12 to
15 percent of all imported pecans remain in Mexico; the balance is for
shelling and re-exported to the United States.

# Stocks

In recent years there have generally been no stocks at the end of the
marketing year because both domestic and export market demand and
attractive prices clear the market. Furthermore, in Mexico, there is
insufficient cold storage warehouses to store a significant amount of
pecans.

# Policy

Because of the benefits derived from selling into the export market,
such as high prices and payment on delivery, growers tend to sell for
export. Growers prefer to first sell their higher quality product for
export. Mexican companies then import lower quality pecans from the
United States if there is a need to meet domestic demand.

# Marketing

The grading standards for Mexico's export shelled pecans are the same as
the standards in the United States. Mexico has no domestic standards for
pecans, and therefore uses U.S pecan standards. There are not enough
cold storage warehouses in Mexico to store pecans throughout the year.
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. Retail distribution to bakeries, food processors, and retail
outlets is left to the wholesale market in Mexico, which is also short
of storage facilities.

**Tables**

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

(Hectares, Metric Tons, Trees)

  ------------------------- ------------ --------- ----------- --------- ----------- ---------
  **PSD Table**                                                                      

  **Country:**              **Mexico**                                               

  **Commodity:**            **Pecans,                                                
                            In-shell                                                 
                            Basis**                                                  

                            **2002**               **2003**              **2004**    

                            Old          New       Old         New       Old         New

  Market Year Begin         **10/02**              **10/03**             **10/04**   

  Area Planted              53500        53500     53500       53500                 54000

  Area Harvested            51500        51500     52000       52000                 53000

  Bearing Trees             3090000      3090000   3100000     3100000               3150000

  Non-Bearing Trees         135000       135000    125000      125000                130000

  Total Trees               3225000      3225000   3225000     3225000               3280000

  Beginning Stocks          0            0         0           0                     0

  Production                63000        63000     63500       63500                 64000

  Imports                   2500         8350      2000        17100                 18000

  TOTAL SUPPLY              65500        71350     65500       80600                 82000

  Exports                   34200        39850     34000       48600                 49500

  Domestic Consumption      31300        31500     31500       32000                 32500

  Ending Stocks             0            0         0           0                     0

  TOTAL DISTRIBUTION        65500        71350     65500       80600                 82000
  ------------------------- ------------ --------- ----------- --------- ----------- ---------

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

**Trade Matrix**

  ---------------------- ------------ ----------- --------------------- ----------- -----------
  [Pecans, In                                     UNITS: Kilograms                  
  shell]{.smallcaps}                                                                

  Exports To:            2002         2003\*      Imports From:         2002        2003\*

  U.S.                   19,009,300   2,452,100   U.S.                  7,252,300   4,936,800

  Other                                           Other                             

  [FRANCE]{.smallcaps}   9,241        4,337       [CHINA]{.smallcaps}   9,054       0

  Total of Other         9,241        4,337       Total of Other        9,054       0

  Others unlisted        81           0           Others unlisted       1,547       0

  Grand Total            19,018,622   2,456,437   Grand Total           7,262,901   4,936,800
  ---------------------- ------------ ----------- --------------------- ----------- -----------

  ---------------------- ----------- ----------- --------------------- ---------- ----------
  [Pecans,                                       UNITS: Kilograms                 
  Shelled]{.smallcaps}                                                            

  Exports To:            2002        2003\*      Imports From:         2002       2003\*

  U.S.                   8,213,600   3,359,700   U.S.                  476,300    376,700

  Other                                          Other                            

                         0           0           [CHINA]{.smallcaps}   70,079     6,746

  Total of Other         0           0           Total of Other        70,079     6,746

  Others not listed      0           0           Others not listed     506        1,250

  Grand Total            8,213,600   3,359,700   Grand Total           546,885    384,696
  ---------------------- ----------- ----------- --------------------- ---------- ----------

SOURCE: World Trade Atlas, Mexico Edition & FAS US Trade Data from U.S.
Customs

NOTE: \* indicates that figures are for January thru April.

#