Voluntary Report - public distribution

**Date:** 11/25/2003

**GAIN Report Number:** MX3160

MX3160

**Mexico**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, Issue #53**

**2003**

**Approved by:**

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

#### U.S. Embassy

**Prepared by:**

Bruce Zanin, Benjamin Juarez, Dulce Flores, Edgar Ramirez and Heriberto
Lugo

**Report Highlights:**

\*GOM TO CUT IRRIGATION DISTRICT\'S BUDGET

\*CONGRESSIONAL AGRICULTURAL COMMISSION DRAFTS PROPOSAL TO ADDRESS U.S.
BIO-

TERROR ACT

\*NEW IMMIGRATION AND CUSTOMS INSPECTIONS AFFECT COMMERCE

\*MEXICAN RESTAURANTS IMPORTANT PURCHASERS OF FOOD PRODUCTS

\*CORN GROWERS DEMAND FAIR PRICES

\*MEXICO LOSER WITH NAFTA

\*LA PAZ, BAJA CALIFORNIA SUR, WILL RECEIVE IMPORTANT FINANCIAL
INVESTMENT IN 2004

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.

GOVERNMENT TO CUT IRRIGATION DISTRICT'S BUDGET\...FOX TO COMMIT AN
OUTRAGE AGAINST NATIONAL FIELDS

President Fox plans to reduce the budget for the National Water
Commission to \$3,524 million pesos (approximately US\$309 million
dollars), which, according to a local newspaper, will stop the
development of Mexican agriculture. The article further states that this
reduction will obstruct the programs of rehabilitation and modernization
of the irrigation districts as they will only receive \$378.3 million
pesos (approximately US\$33 million dollars) for 2004 compared to \$799
million pesos (approximately US\$70 million dollars) in 2003. (Source:
*El Debate* of Sinaloa, 11/21/03)

CONGRESSIONAL AGRICULTURAL COMMISSION DRAFTS PROPOSAL TO ADDRESS U.S.
BIO-TERROR ACT (BTA); CONGRESSIONAL AGRICULTURE COMMISSION PRESIDENT
(PRI) PROPOSES STEPS TO INITIATE A "MIRROR LAW" TO OFFSET BTA

On November 18, 2003, the Mexican Congressional Agricultural Commission
met to draft a proposal requesting that the Executive Branch make more
of an effort to disclose how the GOM will counter expected negative
effects on Mexican exports to the United States resulting from
implementation of the 2002 Bio-Terror Act (BTA). Within this proposal,
the Commission is requesting more public disclosure, training for
exporters, and funds to modernize export infrastructure. During the
forum discussions, the President of the Agricultural Commission, Cruz
Lopez Aguilar (PRI), encouraged an initiative to create a "Mirror Law"
to offset the BTA. The petition was approved by a majority vote and
further communication was requested. (Source: Web Page of the *Camara de
Diputados, H. Congreso de la Union*)

# 

# NEW IMMIGRATION AND CUSTOMS INSPECTIONS AFFECT COMMERCE

\"Since 2001, the U.S. government has added more obstacles to food
imports,\" says Arnold Benson, a food commerce man. Benson is one of
many businessmen affected by the new immigration and customs inspection
law that were put in place after the September 11 terrorist attacks in
the United States. Benson said the new laws have affected his business a
great deal due to the obstacles imposed on fish imports by the U.S.
Government. He further said that the security measures start when the
fish is taken from the sea and continue until the fish are sent to the
border in trucks. He stated, \"The U.S. government is more worried about
terrorism and making their customs and immigration laws more effective
rather than the plight of the working people. The U.S. government is
putting working people between a rock and a hard place.\" (Source: *El
Bravo de Matamoros*, 11/21/03)

# MEXICAN RESTAURANTS IMPORTANT PURCHASERS OF FOOD PRODUCTS

While commenting favorably on the Fox Administration\'s proposal to
lower the value added tax from 15 percent to 10 percent and to apply it
to food products, the President of the Mexican Restaurant Association,
CANIRAC, expounded on the importance of the restaurant sector to the
Mexican economy. Since restaurants already apply the value added tax,
the change would likely lead to an increase in annual restaurant sales.
He also noted that while the average Mexican family spends 4 percent of
its annual income on education and the same amount on soft drinks, it
spends 9.8 percent on eating out. Finally he stated that the 220,000
restaurants in Mexico spend about US\$4.8 billion dollars on food
purchases every year. (Source: *El Financiero*, 11/12/03)

# CORN GROWERS DEMAND FAIR PRICES

Enrique Habberman Gastelum, President of the Farmers Association from
Culiacan River, stated that corn producers from Sinaloa demanded a price
of 1,887 pesos per metric ton (roughly US\$168.00/MT) for the upcoming
winter harvest. The reason for the increase is due to higher costs for
fertilizers, transportation, and miscellaneous items. He pointed out
that the price of 1,600 pesos/MT (US\$142.45/MT), including the
governmental support farmers obtained during the 2002/03 cycle, won't be
enough to cover the substantial increases in the upcoming cycle.
(Source: *EL Financiero*, 11/17/03)

# MEXICO LOSER WITH NAFTA

A study published by the Carnegie Endowment for International Peace
concludes that the North America Free Trade Agreement (NAFTA) failed to
generate substantial job growth in Mexico, hurt hundreds of thousands of
subsistence farmers and had \"minuscule\" net effect on jobs in the
United States. The Carnegie Endowment, an independent, Washington-based
research institute, issued its report on Tuesday, November 18, 2003. The
report seeks to debunk both the fears of American labor that NAFTA would
lure large numbers of jobs to low-wage Mexico, as well as the hopes of
the trade deal\'s proponents that it would lead to rising wages, as well
as declines in income inequality and illegal immigration. "On balance,
NAFTA\'s been rough for rural Mexicans,\" said John J. Audley, who
edited the report. \"For the country, it\'s probably a wash. It takes
more than just trade liberalization to improve the quality of life for
poor people around the world.\" The Carnegie findings strike a much more
pessimistic note than those of a World Bank team that concluded in a
draft report this year that the trade accord \"has brought significant
economic and social benefits to the Mexican economy.\" The authors of
the report say developing countries have much to learn from Mexico\'s
mistakes in the NAFTA deal. (Source: *Reforma, El Universal*, 11/21/03)

**LA PAZ, BAJA CALIFORNIA SUR, WILL RECEIVE IMPORTANT FINANCIAL
INVESTMENT IN 2004**

Víctor Manuel Guluart, Mayor of La Paz (capital city of Baja California
Sur), announced several new projects bringing financial investments in
the area in 2004. A group of national investors are looking forward to
the operation of what will be the Hotel Gran Baja, which will give a
boost to the tourist zone of Playa Tecolote. He also anticipates the
investment of two important retailers (Costco and Comercial Mexicana) in
La Paz. (Source: *El Sudcaliforniano*, 11/24/03)

(**ATO/Monterrey Note**: It should be noted that Costco, Soriana and
Centro Comercial Californiano will all be operating in Los Cabos, Baja
California Sur by December 2003. This gives additional and distinct
distribution channels for those U.S. companies interested in exporting
products for the hotel and restaurant sector.

REPORTS RECENTLY SUBMITTED BY FAS/MEXICO CITY

+-------------+--------------------------------------------+----------+
| ##          | ###### Title                               | **Date** |
| #### Number |                                            |          |
+-------------+--------------------------------------------+----------+
| MX3158      | Weekly Highlights & Hot Bites Issue #52    | 11/18/03 |
+-------------+--------------------------------------------+----------+
| MX3159      | Mexico's Lower Chamber Opposes Proposal to | 11/19/03 |
|             | Eliminate HFCS Tax                         |          |
+-------------+--------------------------------------------+----------+

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selection of FAS\' worldwide agricultural reporting.

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