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Voluntary Report - public distribution

**Date:** 3/20/2003

**GAIN Report Number:** MX3032

MX3032

**Mexico**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, Issue #15**

**2003**

**Approved by:**

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

#### U.S. Embassy Mexico City

**Prepared by:**

Jorge Sánchez

**Report Highlights:**

\$10.5 MILLION PROJECTS SALES REPORTED AT ANTAD 2003!\*CHINESE EXPORT TO
THE U.S. DISPLACE MEXICO'S NUMERICAL RANK\*GOM MAY CALL ON CANADIAN AND
U.S. AGRICULTURAL EXPERTS\*PIPE DREAMS\*"THE FARMLAND CAN'T STAND
ANYMORE," UPDATE\*PATRON SEEKS RURAL DEVELOPMENT FUNDING\*A CRUCIAL MOVE
FOR MEXICAN TRADE POLICY\*FARMING GROUPS ANXIOUS ABOUT NATIONAL
AGRICULTURAL PACT\*POOR WATER CONDITIONS MAY POSE AS FAVORABLE\*NATIONAL
AGRICULTURAL PACT NEGOTIATIONS WILL NOT BE EASY\*BLAME IT ON THE
INTERMEDIARIES\*FARMING GROUPS WANT EMERGENCY FUNDS\*MEXICO SHOULD
RENEGOTIATE NAFTA\*MEMBERS OF U.S. CONGRESS FLEX POLITICAL
MUSCLES\*MEXICAN FOOD EXPORTERS ARE AWARE OF NEW REGULATIONS\*FLORES
RALLIES MEXICAN TRUCKERS AND ACCUSES GOM\*MEXICO IN SERIOUS WATER
PROBLEMS\*EDUCATION IS KEY FOR MEXICO'S RURAL DEVELOPMENT\*RETALIATION
AGAINST MEXICAN CONSUMER GOODS\*FDA BIOTERRORISM LAW IMPLICATES FOREIGN
AND DOMESTIC\*INVESTORS PLACE THEIR TRUST IN MEXICO

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Mexico \[MX1\]

\[MX\]

Welcome to Hot Bites from Mexico, a weekly review of issues of interest
to the U.S. agricultural community. The topics covered in this report
reflect developments in Mexico that have been garnered during travel
around the country, reported in the media, or offered by host country
officials and agricultural analysts. Readers should understand that
press articles are included in this report to provide insights into the
Mexican \"mood\" facing U.S. agricultural exporters. Significant issues
will be expanded upon in subsequent reports from this office.

DISCLAIMER: Any press summary contained herein does NOT reflect USDA's,
the U.S. Embassy's, or any other U.S. Government agency's point of view
or official policy.

**\$10.5 MILLION PROJECTS SALES REPORTED AT ANTAD 2003!**

The 20^th^ Anniversary of ANTAD 2003, the largest food and retail show
in Latin America, was held March 14-17, 2003 at the Expo Guadalajara in
Guadalajara, Mexico. Nearly 50 companies were located in the USA
Pavilion. Companies reported USD \$10.6 million in 12-month projected
sales and 386 serious contacts. Products that generated interest were
chocolates, cereal, cheesecakes, Kosher, onions, white chocolates, beef,
popcorn, ice cream, energy drinks, snacks, almond meats, soup, dry,
cheese, pies, duck meat, non-refrigerated cheese snacks, pork, gourmet
lollipops, and soy milk. (Source: Agricultural Trade Office, Mexico and
Agriculture Exports, WO, 3/20/03)

# 

# CHINESE EXPORT TO THE U.S. DISPLACE MEXICO'S NUMERICAL RANK

According to the U.S. Department of Commerce, China overtook Mexico as
the second largest exporter to the United States last year.  The largest
exporter of goods to the United States is Canada.  From August
2002-January 2003, China sold USD \$72.2 billion of goods to the United
States, while Mexico sold USD \$68.4 billion of goods during the same
period. (Source: *Reforma*, 3/14/03)

# GOM MAY CALL ON CANADIAN AND U.S. AGRICULTURAL EXPERTS 

The National Governors' Conference (CONAGO) will present a proposal for
agricultural development to Secretary of Agriculture Javier Usabiaga and
Secretary of Government Affairs Santiago Creel.  The proposal recommends
that the GOM open a round of negotiations with Canadian and U.S. experts
to address products affected by agricultural subsidies.  Farming leaders
will deliver a proposal for the National Agricultural Pact to Secretary
of Government Affairs Santiago Creel, in which they will demand the
renegotiation of NAFTA's agricultural chapters, reforms to Article 27 of
the Constitution, and the creation of an agricultural support fund from
surplus oil revenues. (Source: *Reforma, El Universal, La Jornada,
Milenio Diario*, 3/14/03)

# PIPE DREAMS 

On March 13, 2003, farming groups returned to the picket lines to
express their disdain with the lack of a National Agricultural Pact.
Farming groups believe that the likelihood of such a pact is dismal.
Farming groups also added that they will take to the streets again in a
massive protest on April 10, 2002. (Source: *Milenio Diario*, 3/14/03)

# "THE FARMLAND CAN'T STAND ANYMORE," UPDATE

The farming group "The Farmland Can't Stand Anymore," has been steadfast
in their adamancy in renegotiating NAFTA's agricultural chapter, but now
add to their list of demands the Constitutional reform of Article 27.
Additionally, "The Farmland Can't Stand Anymore", drafted a copy of what
the National Agricultural Pact should resemble. (Source: *El Universal*,
3/14/03)

# PATRON SEEKS RURAL DEVELOPMENT FUNDING

On March 13, 2003, State of Yucatán Governor, Patricio Patrón, visited
Washington in search of financial support to a number of housing and
rural development projects for his state. Governor Patrón met with
Enrique Iglesias, the Interamerican Development Bank President, who
showed interest in the projects and willingness to support them.
(Source: *Reforma*, 3/14/03)

**A CRUCIAL MOVE FOR MEXICAN TRADE POLICY**

A special report describes the controversy surrounding a plan to
transfer the Deputy Secretariat of Foreign Trade Negotiations from the
Economic Secretariat (SE) to the Secretariat of Foreign Affairs (SRE).
Foreign trade specialists said this would put Mexico's trade policies at
the mercy of diplomats. (Source: *Reforma*, 3/17/03)

# FARMING GROUPS ANXIOUS ABOUT NATIONAL AGRICULTURAL PACT

Farming groups demanded that the federal government indicate a
commitment to include a common diagnosis of Mexico's agricultural
problems in the National Agricultural Pact.  Farmers want the federal
government to declare Mexican agriculture to be in a state of emergency,
paving the way for an emergency fund to reactivate the rural sector. 
Víctor Suárez, spokesman for "The Farmland Can't Stand Anymore," said
that farming groups would deliver their final proposal to the federal
government on March 17, 2003, for the agricultural pact. (Source:
*Reforma, El Universal, El Financiero, La Jornada*, 3/17/03)

# POOR WATER CONDITIONS MAY POSE AS FAVORABLE 

Mexico is a possible candidate to host the World Water Forum in 2006. 
According to a U.N. study, Mexico ranks 106th out of 188 nations in
regard to water quality.  Farmers in the Valle Hundido in Coahuila
accused the National Water Commission of playing favorites in the
distribution of water. (Source: *Reforma, El Financiero, La Jornada*,
3/17/03)

# NATIONAL AGRICULTURAL PACT NEGOTIATIONS WILL NOT BE EASY 

Political negotiations between farming groups and federal government
officials will define and prescribe the wording for the National
Agricultural Pact. The National Farm Worker Confederation (CNC) stated
that renegotiation of NAFTA's agricultural chapter and declaring a
moratorium on the rural sector farmland are their main reservation.
(Source: *El Universal*, 3/17/03)

# 

# 

# 

# 

# 

# BLAME IT ON THE INTERMEDIARIES

On March 17, 2003, Secretary of Agriculture, Javier Usabiaga, said that
he is working on bridging the agricultural commercial gap with Mexico's
NAFTA partners. Secretary Usabiaga added that in addition to attacking
market distortions and asymmetries he would need to eliminate
agricultural intermediaries who "drive up prices and deteriorate product
quality and give producers a bad name." (Comment: Mr. Usabiaga referred
to "intermediaries" as distributors who have a reputation for
underpaying producers and driving up market prices for retailers. End
Comment.) (Source: *El Universal*, *El Financiero, Reforma,* 3/17/03)   
    \
**FARMING GROUPS WANT EMERGENCY FUNDS**

On March 17, 2003, farming group leaders demanded that the executive
government and Congress declare a moratorium on the rural sector
farmland. Farming groups would like to see emergency funds go toward a
reactivation of investment for building a productive rural sector.
Additionally, farming groups want a percentage of oil revenue and
federal reserves to help pay for the problems with the rural sector.
(Source: *El Universal*, 3/17/03)

# MEXICO SHOULD RENEGOTIATE NAFTA

A researcher for the Centre for Prospective Economic Studies (a French
policy think tank), Robert Boyer, said Mexico should renegotiation its
commercial treaties with the United States. According to Mr. Boyer,
Mexico should look to other countries like Brazil, Argentina, and Chile
for support in order to prevent a domino effect in the event the United
States economically collapses due to war, thereby not dragging Mexico
down with them. (Source: *El Financiero*, 3/17/03)

# MEMBERS OF U.S. CONGRESS FLEX POLITICAL MUSCLES 

U.S. legislators submitted a letter to the Mexican Ambassador to the
United States, Juan José Bremer, where they aggressively demanded the
immediate removal of trade barriers on high fructose corn syrup (HFCS)
in the Mexican market and threatened retaliation. The bipartisan letter
was initiated by U.S. Congress Finance Committee Chairman, Jim Nussle,
(R-IA) and signed by 30 members of Congress. The Corn Refiners
Association (CRA) and the Corn Growers Association both applauded the
efforts made by legislators. (Comment: Information in this article was
confirmed for verity by Congressman Nussle's Office. End Comment.)
(Source: *El Financiero*, 3/17/03)

MEXICAN FOOD EXPORTERS ARE AWARE OF NEW REGULATIONS

On February 18, 2003, the Food and Drug Administration (FDA) announced
new security measures for food exporters to prevent bioterrorist
attacks.  During a videoconference organized by the U.S. Embassy Office
of Public Affairs and Leslye Miller, associate director of the Center
for Food Security, it was stated that Mexican food exporters have been
aware of the new regulations since February 6, 2003. (Source: *El
Universal*, Excelsior, La Jornada, 3/18/03)

# FLORES RALLIES MEXICAN TRUCKERS AND ACCUSES GOM

On March 18, 2003, Leon Flores, a presidential candidate for the
National Trucking Chamber (CANACAR), demanded that the federal
government "end privileges" for U.S. truckers operating in Mexico. 
Flores said that 100 companies face bankruptcy because the GOM had acted
passively about opening U.S. borders to Mexican trucks. (Source: *El
Universal*, 3/19/03)

# MEXICO IN SERIOUS WATER PROBLEMS

On March 17, 2003, during the World Water Forum in Japan, Abel Mejia,
the Latin American coordinator of water issues for the World Bank, said
that Mexico faced the most serious water problems out of all the nations
in Latin America. The federal government is preparing a decree to
regulate the use of water in the Lerma-Chapala river basin. Water
authorities in central Mexico have worked on a number of campaigns to
promote more efficient water use, but growing populations put a strain
on the limited amount of potable water. (Source: *Reforma*,3/18/03)\
\
**EDUCATION IS KEY FOR MEXICO'S RURAL DEVELOPMENT**

On March 17, 2003, the Inter-American Development Bank (IADB) announced
it would loan USD \$210 million to Mexico for the first phase of a
project designed to improve education in rural communities. (Source: *El
Universal, El Financiero, La Jornada*, 3/18/03)

# RETALIATION AGAINST MEXICAN CONSUMER GOODS

Many members of the Mexican business community have voiced their concern
of a possible U.S. retaliation on Mexican consumer goods. They warn that
U.S. consumers and investors could "punish" them the same way they are
punishing French imports. However, others said U.S. consumers are price
sensitive and trust quality while investors stick to stability and
trustworthiness of a nation's economy and not how a country voted in the
United Nation's Security Council. (Source: *Reforma, El Economist, El
Financiero, El Universal,* 3/18/03)       \
**FDA BIOTERRORISM LAW IMPLICATES FOREIGN AND DOMESTIC**

As of December 12, 2004, the Food and Drug Administration (FDA) will
implement the New Bioterrorism laws to reinforce food imports. Leslye
Miller, associate director of the Center for Food Security warned that
this legislation mandates that over 2,000 foreign companies and 200,000
U.S. companies register online with the FDA. (Source: *El Financiero,
Milenio Diario, El Universal*, 3/18/03)

# INVESTORS PLACE THEIR TRUST IN MEXICO

On March 18, 2003, incoming President to the Association of
International Financial Institutions, Miguel Noriega, considered
Mexico's economic conditions and highlighted foreign investment
opportunities, specifically in the consumer goods industry. (Source: *El
Financiero*, 3/19/03)

**REPORTS SUBMITTED RECENTLY BY FAS/MEXICO CITY**

+-------------+--------------------------------------------+----------+
| ##          | ###### Title                               | **Date** |
| #### Number |                                            |          |
+-------------+--------------------------------------------+----------+
| MX3030      | Hot Bites Issue #14                        | 03/13/03 |
+-------------+--------------------------------------------+----------+
| MX3031      | Assessment of U.S. and Mexico Winners &    | 03/19/03 |
|             | Losers                                     |          |
+-------------+--------------------------------------------+----------+

# 

We are available at **http://www.atomexico.gob.mx** or visit our
headquarter\'s home page at **http://www.fas.usda.gov** for a complete
selection of FAS\' worldwide agricultural reporting.

**FAS/MEXICO EMAIL**

To reach us at FAS/Mexico City, email us at:

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