Voluntary Report - public distribution

**Date:** 4/13/2005

**GAIN Report Number:** MX5034

MX5000

**Mexico**

**Agricultural Situation**

**Weekly Highlights and Hot Bites, Issue #13**

**2005**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Benjamín Juárez, Sal Trejo, Gabriel Hernández, Bruce Zanin, Marissa
Chavez, and Carlos González

**Report Highlights:**

-   MEXICO PLANS CAMPAIGN TO INCREASE RICE CONSUMPTION

-   FARMERS ORGANIZATION REQUESTS ADDITIONAL SUPPORTS FOR BASIC GRAINS

-   AGRICULTURAL CONDITIONS SIMILAR TO THOSE THAT SPARKED MEXICAN
    REVOLUTION ACCORDING TO CNC

-   MEXICO REDUCES ITS DEPENDENCE ON THE U.S. DOLLAR

-   PROFITS FOR WAL-MART OF MEXICO INCREASE IN FIRST QUARTER

-   CUBA TO PURCHASE MORE THAN 15 MILLION TONS OF PORK AND CHICKEN FROM
    U.S.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Mexico \[MX1\]

\[MX\]

**MEXICO PLANS CAMPAIGN TO INCREASE RICE CONSUMPTION**\
\
According to a local newspaper, one the principal plans of Mexican
industrialists and rice producers is to increase rice consumption in
Mexico. Consumption in Mexico currently stands at 5 kilograms per capita
while the rest of Latin America consumes over 20 kilograms and some
countries, like Peru and Costa Rica, surpass this figure with 62
kilograms and 40 kilograms per capita per year, respectively. The
Mexican Rice Council (CMA), along with the National Federation of Rice
Producers (FENAPA), wants to increase per capita consumption in Mexico
to 10 kilograms through better quality, packaging, labeling, and
attractive prices with periodic discounts to consumers.  They hope to
achieve this plan by securing industrialist, producer, state government
and federal government funding.  (Source: *El Financiero*, 04/06/2005)\
\
**FARMERS ORGANIZATION REQUESTS ADDITIONAL SUPPORTS FOR BASIC GRAINS**\
\
The National Farmers Council (CNA) asked the Agriculture Secretariat for
emergent marketing support for 7 MMT of grains (mainly corn, sorghum and
wheat).  The supports would only be applied for the 2004/05 fall/winter
crop (harvest in 2005 spring/summer).  The main reason for this request
is the increased cost of farm inputs, which would nullify farmers'
profits. According to Juan Habermann, CNA\'s agricultural
Vice-President, farmers have faced an accumulated inflation of 18
percent (on their costs) since 2002.  In a written report that the
CNA\'s Vice-President presented to Agriculture Secretary Javier Usabiaga
during a private meeting, the requested \"emergent\" support for grain
prices would be 1,705 pesos per metric ton (roughly US\$ 151/ton).  The
support would be applied for corn, wheat, canola, knapweed, chickpea,
dry bean and cotton for the fall/winter 2004/05-crop cycle.   In total
this new support would represent approximately 3.4 billion pesos (US\$
301 million). (Source: *El Financiero*, 04/08/2005)

**AGRICULTURAL CONDITIONS SIMILAR TO THOSE THAT SPARKED MEXICAN
REVOLUTION ACCORDING TO CNC**\
\
The same agricultural conditions that led to the Mexican Revolution 86
years ago are present again today, according to the National Farmers
Federation (CNC). "More than the misery they are living in, what
irritates *campesinos* the most is the unfair distribution of wealth in
Mexico. This unfair distribution has been accentuated due to a 25-year
period of neo-liberal policy and the 11 years of NAFTA, leading Mexico
to defeat Brazil in the Latin American '*social unfairness
championship*'. The worst part is that poverty has grown rapidly,
creating similar conditions to those in the beginning of the past
century that eventually provoked the insurgency and the Mexican
Revolution", said CNC leader Heladio Ramirez. According to Ramirez,
"while 11 families control 5 percent of the domestic GDP, 70 percent of
the Mexican population is considered to live below poverty and extreme
poverty levels.\" (Source: *Excelsior*, 04/11/2005)

###### 

**MEXICO REDUCES ITS DEPENDENCE ON THE U.S. DOLLAR**\
\
Over the past decade, Mexico has reduced its dependence on the U.S.
dollar.  Dollar deposits in the Mexican financial system have decreased
from 20 percent of all deposits in 1995, to nine percent today.  Public
debt in U.S. dollars has dropped from 80 percent to 39 percent of all
debt in the same time period.  Finally, private dollar-denominated debt
has been halved, from 18 percent to nine percent.  According to the
deputy governor of the Bank of Mexico, this \'de-dollarization\' of the
debt has come about as an indirect result of the strengthening of the
Mexican financial system.  Most international analysts agree that a
reduction in dollar-denominated accounts and debt is a sign of a healthy
financial system.  (Source: *El Financiero*, 04/11/2005)

# PROFITS FOR WAL-MART OF MEXICO INCREASE IN FIRST QUARTER

Wal-Mart of Mexico (Walmex), the largest retail chain in the country,
reported a 35 percent increase in its net profits from the first quarter
as compared to the same period in 2004. Walmex stated that its net
earnings were US\$ 166 million dollars. Through aggressive expansion and
a low-price strategy, the chain is winning more participation in the
fragmented Mexican market. "Sales growth, combined with lower operation
costs, resulted in an operational profit increase of 28 percent as
compared to 2004," said the company in a press release (operation
profits reached US\$ 212 million). The chain plans to invest US\$ 737
million to open 70 new commercial units and increase its sales floor by
12 percent in 2005. Walmex, which operates 696 commercial units in five
different store formats and restaurants, announced that it opened a
Bodega Aurrera, a Sam's Club and a restaurant during the first quarter.
(Source: *Reuters*, 04/07/2005)

CUBA TO PURCHASE MORE THAN 15 MILLION TONS OF PORK AND CHICKEN FROM U.S.

According to an agreement signed on April 7 in Havana, Cuba will
purchase US\$ 14.3 million in pork and poultry meat from Calhoun Foods.
According to the agreement, Cuba's national importing firm, Alimport,
will purchase more than 1,500 tons of pork and some 8,400 of poultry
meat from the Alabama based company. The contract was signed on the
second day of a food products exposition in which 35 companies from 15
U.S. states participated. Since 2001, Cuba has purchased more than US\$
1.3 billion in food products. When the 2000 law that authorized
agricultural trade with Cuba was approved, the island was ranked number
226 among markets for American food products. Five years later, it has
improved to 21st. (Source: *Notimex*, 04/07/2005)

REPORTS RECENTLY SUBMITTED BY FAS/MEXICO CITY

+----------+------------------------------------------------+----------+
| # NUMBER | # TITLE                                        | # DATE   |
+----------+------------------------------------------------+----------+
| MX5029   | Weekly Highlights and Hot Bites, Issue #12     | 04/06/05 |
+----------+------------------------------------------------+----------+
| MX5030   | Stone Fruit Annual Report                      | 04/07/05 |
+----------+------------------------------------------------+----------+
| MX5031   | Reference prices for CLQ                       | 04/08/05 |
+----------+------------------------------------------------+----------+
| MX5032   | Mexico Amends the Allocation of the 2005       | 04/11/05 |
|          | Tariff-Rate Quota for Milk Powder              |          |
+----------+------------------------------------------------+----------+
| MX5033   | Oilseeds and Products Annual Report            | 04/11/05 |
+----------+------------------------------------------------+----------+