Voluntary Report - public distribution

**Date:** 5/19/2006

**GAIN Report Number:** MX6041

MX6017

**Mexico**

**Agricultural Situation**

**Weekly Highlights and Hot Bites #19**

**2006**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Valerie Brown-Jones, Gabriel Hernandez, Benjamin Juarez, Heriberto Lugo,
and Jeff Nawn

**Report Highlights:**

-   PRESIDENTIAL RACE

-   **AMLO GIVES CNA THE COLD SHOULDER**

-   **FIRST QUARTER GDP GROWS BY 5.5%, FASTEST PACE SINCE 2000**

-   **Barsin, A New Alternative**

-   **HIGHER SUGAR PRICES AFFECT OTHER INDUSTRIES**

-   **CONCERN FOR MEXICAN DRY BEANS PRODUCERS**

-   **Growing and Steady Demand for Ready-to-Eat Foods**

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Mexico \[MX1\]

\[MX\]

**PRESIDENTIAL RACE**

Calderon, a former energy minister in the Fox administration, took the
lead in an "El Universal" voter opinion poll on Monday, May 15. Calderon
led with 39 percent of the vote in May, up from 34 percent in April.
Former Mexico City Mayor Andres Manuel Lopez-Obrador\'s support fell to
35 percent in the poll, down from 38 percent. The survey is at least the
fourth to show Calderon. In separate ads Calderon has claimed his plan
to boost investment will create jobs and stem immigration to the United
States. The "El Universal" poll of 1,500 voters across the nation was
taken May 5-8 and has a margin of error of plus or minus 2.5 percentage
points. (Source: El Universal; 05/15/2006)

######### AMLO GIVES CNA THE COLD SHOULDER 

Despite invitations to meet with the Mexico's lead agribusiness
association, presidential candidate Andres Manuel Lopez Obrador (AMLO),
maintains that his schedule is full, reported the head of the National
Agricultural Council (CNA) Jaime Yesaki. "We really regret this fact
since our meet and greet meetings with the other candidates will start
shortly ---Calderon next week and Madrazo, Mercado, and Campa in June---
but apparently the agricultural sector is not on AMLO's agenda, nor are
meetings with agribusiness leaders," added Yesaki. The CNA recently
presented "10 Basic Points for the Countryside" that the presidential
candidates must take into consideration. Financing, technological
investment, economic stability, as well as the continuance of current
support programs, like PROCAMPO and Target Price, are some of the key
points. Yesaki said that the CNA's view is that the candidates must
think in terms of how to fuel the agricultural sector through a change
in production patterns and commercialization channels. Also, "CNA does
not support AMLO's intention to renegotiate NAFTA provisions on beans,
corn, milk, and sugar. However, we do support the implementation of
certain mechanisms to help the country face the market opening," Yesaki
added. (Source: Reforma; 05/17/2006)

#########  FIRST QUARTER GDP GROWS BY 5.5%, FASTEST PACE SINCE 2000 

The Mexican economy expanded at its fastest pace in almost six years in
the first quarter of 2006, spurred by record oil prices, falling
interest rates, and growing U.S. demand for exports. The economy grew
5.5 percent from the same period one year ago, and expanded by 2.7
percent in the fourth quarter of 2005, and 3.4 percent in the third
quarter of 2005, stated a spokesman for the Secretariat of the Economy.
The growth was even stronger than the 5.4 percent median forecast in a
Bloomberg survey of 20 economists. \"The economy is very healthy,\"
Alvarado Rodriguez, chief financial officer with Vitro SA, the nation's
largest glassmaker, said in a telephone interview from Monterrey. \"Our
sales to manufacturers are increasing both inside and outside of
Mexico.\" The acceleration of Latin America's second-largest economy
ahead of the July presidential elections is helping turn polls in favor
of Felipe Calderon, the candidate for the ruling National Action Party
(PAN), said Chappell Lawson, a political science professor at the
Massachusetts Institute of Technology. Calderon, a former energy
secretary under President Vicente Fox, has stressed job creation in his
campaign ads. \"Calderon has begun emphasizing job creation to broaden
his base,\" Lawson said in a telephone interview from Cambridge,
Massachusetts. \"If he can successfully own that issue, he will win the
election.\" The economic expansion is also hurting the campaign of
opposition candidate Andres Manuel Lopez Obrador, who has criticized the
Fox administration for failing to create jobs. (Source: El Universal;
05/18/2006)

######### Barsin, A New Alternative

Barsin (\'bar without\' in Spanish) is a new non-alcoholic bar in
Mexico. A concept introduced in Spain, Barsin offers its patrons all of
the regular bar staples, but with a twist: \"no kick.\" Located in
Mexico City, Barsin has been so successful in its first six months that
there are plans to open a second Barsin in the near future. (Source: El
Financiero 5/17/06)

######### HIGHER SUGAR PRICES AFFECT OTHER INDUSTRIES

According to Mexican confectionary industry representatives, there is
currently a great deal of speculation that the industry is at risk
because of low sugar inventory levels and high domestic sugar prices.
The President of the Food Industry from the State of Jalisco stated that
imported sweets from China, Ecuador, and Chile have been gaining market
share in Mexico because manufacturers in those countries are able to
purchase sugar at lower prices on the international market, whereas
Mexican producers are forced to purchase high priced domestic sugar.
Mexican wholesale standard sugar prices have increased from March to May
from \$5.46 to \$6.53 pesos/kg (U.S. \$0.49 to \$0.58/kg). This
situation is leading to a loss of competitiveness for Mexican companies.
Carlos Blackaller of the National Sugarcane Association admits that
prices have increased, but justifies this by stating that they are only
back to their fourth quarter 2004 levels. Blackaller added that changes
in sugar prices reflect international conditions and not a lack of
domestic supply. (Source: Reforma, Economista, 05/18/06)

######### CONCERN FOR MEXICAN DRY BEANS PRODUCERS 

According to Abraham Montes, leader of the National Union of Corn
Growers of the National Farmers Confederation, dry bean producer concern
about the 2008 NAFTA opening is not without merit. This scheduled market
opening is a very serious matter because the elimination of the current
barriers, in the form of tariff rate quotas (TRQs), will lead to a
massive influx of dry beans from the U.S. into the Mexican market, and
subsequently to the collapse of an already vulnerable industry. Abraham
Mounts voiced his concern because white corn and dry beans farmers in
the rural areas are, "not prepared for the competition." (Source: El
Financiero; 05/19/2006)

######### Growing and Steady Demand for Ready-to-Eat Foods

The Mexican middle class is growing, and more women are joining the
workforce. The question for Mexican food retailers is how this
demographic and economic trend will change consumer preferences.
According to "Canasto de Alimentos," a division of AC Nielson, demand
for prepared, frozen, canned, and other ready-to-serve foods will grow
by 9.7 percent in 2006. These well-informed consumers are also demanding
more products without sugar or cholesterol. Overall, they are more
selective in their purchasing for their families and more conscience of
their own intake. (Source: Reforma 5/17/0)

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

+----------+-----------------------------------------------+----------+
| # NUMBER | # TITLE                                       | # DATE   |
+----------+-----------------------------------------------+----------+
| MX6040   | Coffee Annual                                 | 5/15/06  |
+----------+-----------------------------------------------+----------+
| MX6039   | Dairy Semi-Annual                             | 5/15/06  |
+----------+-----------------------------------------------+----------+
| MX6038   | Weekly Highlights and Hot Bites #18           | 5/15/06  |
+----------+-----------------------------------------------+----------+
| MX6037   | Cotton Annual                                 | 5/12/06  |
+----------+-----------------------------------------------+----------+
| MX6036   | Dry Bean TRQ                                  | 5/9/06   |
+----------+-----------------------------------------------+----------+
| MX6035   | Weekly Highlights and Hot Bites #17           | 5/8/06   |
+----------+-----------------------------------------------+----------+
| MX6034   | Weekly Highlights and Hot Bites #16           | 4/28/06  |
+----------+-----------------------------------------------+----------+
| MX6033   | Citrus Semi-Annual                            | 4/27/06  |
+----------+-----------------------------------------------+----------+
| MX6032   | Mexico Announces the Continuance of           | 4/25/06  |
|          | Compensatory Duties on Beef Imports           |          |
+----------+-----------------------------------------------+----------+
| MX6031   | Weekly Highlights and Hot Bites #15           | 4/21/06  |
+----------+-----------------------------------------------+----------+