""

Required Report - public distribution **Date:** 1/27/2003

**GAIN Report Number:** MX3006

MX3006

**Mexico**

**Poultry and Products**

**Semi-Annual**

2003

**Approved by:**

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

#### U. S. Embassy

**Prepared by:**

Benjamin Juarez/Gabriel Hernandez

**Report Highlights:**

As a result of the imposition of new quarantine requirements and the
establishment of a provisional safeguard tariff, Mexico's total imports
of poultry products will likely increase only marginally in MY 2003.
Mexico's broiler and turkey meat sectors are anticipating growth of 5
and 7.7 percent, respectively, as previously projected.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Mexico \[MX1\], \[MX\]

TABLE OF CONTENTS

[SECTION I. Poultry Situation and Outlook
3](#section-i.-poultry-situation-and-outlook)

[SECTION II. Statistical Tables 4](#section-ii.-statistical-tables)

[BROILERS RETAIL PRICE 6](#broilers-retail-price)

[BROILERS WET MARKET PRICES 6](#broilers-wet-market-prices)

[WHITE EGGS FARMGATE PRICES 7](#white-eggs-farmgate-prices)

[MEXICAN IMPORTS FOR SELECTED POULTRY PRODUCTS Jan-Sep 2002
8](#mexican-imports-for-selected-poultry-products-jan-sep-2002)

[NAFTA POULTRY END EGGS TARIFF RATE QUOTAS FOR 2002
11](#nafta-poultry-end-eggs-tariff-rate-quotas-for-2002)

[SECTION III. Narrative on Supply and Demand, Policy & Marketing
17](#section-iii.-narrative-on-supply-and-demand-policy-marketing)

[CHICKEN MEAT 17](#chicken-meat)

[PRODUCTION 17](#production)

[CONSUMPTION 17](#consumption)

[TRADE 18](#trade)

[POLICY 19](#policy)

[QUALITY, SAFETY & HEALTH 19](#quality-safety-health)

[TURKEY MEAT 20](#turkey-meat)

[PRODUCTION 20](#production-1)

[CONSUMPTION 20](#consumption-1)

[TRADE 20](#trade-1)

#### 

#  

# SECTION I. Poultry Situation and Outlook 

The forecast for chicken meat production for MY 2003 (Jan-Dec) remains
unchanged at 2.3 MMT due to continued consumer demand for relatively
competitively priced chicken, the trend toward vertical integration in
the industry, and the expectation that the growing number of technical
import requirements on poultry will slow import growth.

Despite expectations that imports of poultry would maintain or exceed
previous growth rates with the full implementation of the NAFTA and the
subsequent lifting of all tariffs and tariff rate quotas, the government
of Mexico recently established a provisional safeguard measure that will
implement a tariff-rate quota on chicken leg quarters. This action
coupled with recent sanitary measures relating to low path Avian
Influenza, Exotic New Castle Disease, and Listeria are all expected to
slow import growth.

The turkey meat production forecast for MY 2003 remains unchanged.
Domestic sausage and cold cut firms continue to be major users of turkey
parts in Mexico.

The estimates of Mexican turkey imports have been lowered for MY 2002
and 2003 based on newly‑released data from the Secretariat of the
Economy and the technical import measures, respectively, outlined in
paragraph one.

# SECTION II. Statistical Tables

  -------------------------- ---------- ------- ------------- --------- ---------- -------
  PSD Table                  Mexico                                                

  Country                                                                          

  Commodity                  Poultry,                         (1000                
                             Meat,                            MT)(MIL              
                             Broiler                          HEAD)                

                             Revised            Preliminary             Forecast   
                             2001               2002                    2003       

                             Old        New     Old           New       Old        New

  Market Year Begin          01/2001            01/2002                 01/2003    

  Inventory (Reference)      0          0       0             0         0          0

  Slaughter (Reference)      0          0       0             0         0          0

  Beginning Stocks           0          0       0             0         0          0

  Production                 2067       2067    2188          2188      2297       2297

  Whole, Imports             5          0       0             0         0          0

  Parts, Imports             230        235     255           225       290        238

  Intra EC Imports           0          0       0             0         0          0

  Other Imports              0          0       0             0         0          0

  TOTAL Imports              235        235     255           225       290        238

  TOTAL SUPPLY               2302       2302    2443          2413      2587       2535

  Whole, Exports             0          0       0             0         0          0

  Parts, Exports             1          0       0             0         0          0

  Intra EC Exports           0          0       0             0         0          0

  Other Exports              0          0       0             0         0          0

  TOTAL Exports              1          1       0             0         0          0

  Human Consumption          2301       2301    2443          2413      2587       2535

  Other Use, Losses          0          0       0             0         0          0

  Total Dom. Consumption     2301       2301    2443          2413      2587       2535

  TOTAL Use                  2302       2302    2443          2413      2587       2535

  Ending Stocks              0          0       0             0         0          0

  TOTAL DISTRIBUTION         2302       2302    2443          2413      2587       2535

  Calendar Yr. Imp. from     0          0       0             0         0          0
  U.S.                                                                             
  -------------------------- ---------- ------- ------------- --------- ---------- -------

  ------------------------- ---------- -------- ------------- --------- ---------- --------
  PSD Table                 Mexico                                                 

  Country                                                                          

  Commodity                 Poultry,                          (1000                
                            Meat,                             MT)(MIL              
                            Turkey                            HEAD)                

                            Revised             Preliminary             Forecast   
                            2001                2002                    2003       

                            Old        New      Old           New       Old        New

  Market Year Begin         01/2001             01/2002                 01/2003    

  Inventory (Reference)     0          0        0             0         0          0

  Slaughter (Reference)     0          0        0             0         0          0

  Beginning Stocks          0          0        0             0         0          0

  Production                13         13       13            13        14         14

  Whole, Imports            4          4        0             0         0          0

  Parts, Imports            167        167      160           150       180        153

  Intra EC Imports          0          0        0             0         0          0

  Other Imports             0          0        0             0         0          0

  TOTAL Imports             171        171      160           150       180        153

  TOTAL SUPPLY              184        184      173           163       194        167

  Whole, Exports            8          8        5             0         5          0

  Parts, Exports            0          0        0             0         0          0

  Intra EC Exports          0          0        0             0         0          0

  Other Exports             0          0        0             0         0          0

  TOTAL Exports             8          8        5             0         5          0

  Human Consumption         176        176      168           163       189        167

  Other Use, Losses         0          0        0             0         0          0

  Total Dom. Consumption    176        176      168           163       189        167

  TOTAL Use                 184        184      173           163       194        167

  Ending Stocks             0          0        0             0         0          0

  TOTAL DISTRIBUTION        184        184      173           163       194        167

  Calendar Yr. Imp. from    0          0        0             0         0          0
  U.S.                                                                             
  ------------------------- ---------- -------- ------------- --------- ---------- --------

## [BROILERS RETAIL PRICE]{.smallcaps}

+-----------------+-----------------+-----------------+-----------------+
| Broilers Retail |                 |                 |                 |
| Price           |                 |                 |                 |
|                 |                 |                 |                 |
| Pesos/kilogram  |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Month           | 2001            | 2002            | Change %        |
+-----------------+-----------------+-----------------+-----------------+
| January         | 18.00           | 18.06           | 0.33            |
+-----------------+-----------------+-----------------+-----------------+
| February        | 18.83           | 16.12           | (14.39)         |
+-----------------+-----------------+-----------------+-----------------+
| March           | 17.97           | 15.08           | (16.08)         |
+-----------------+-----------------+-----------------+-----------------+
| April           | 18.54           | 16.98           | (8.41)          |
+-----------------+-----------------+-----------------+-----------------+
| May             | 19.10           | 17.92           | (6.18)          |
+-----------------+-----------------+-----------------+-----------------+
| June            | 18.47           | 18.54           | 0.38            |
+-----------------+-----------------+-----------------+-----------------+
| July            | 17.30           | 18.25           | 5.49            |
+-----------------+-----------------+-----------------+-----------------+
| August          | 16.93           | 17.93           | 5.91            |
+-----------------+-----------------+-----------------+-----------------+
| September       | 15.86           | 17.59           | 10.91           |
+-----------------+-----------------+-----------------+-----------------+
| October         | 18.50           | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+
| November        | 17.80           | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+
| December        | 17.40           | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+
| Annual Avg.     | 17.89           | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+

## [BROILERS WET MARKET PRICES]{.smallcaps}

+-----------------+-----------------+-----------------+-----------------+
| Broilers\* Wet  |                 |                 |                 |
| Market Prices   |                 |                 |                 |
|                 |                 |                 |                 |
| Pesos/kilogram  |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Month           | 2001            | 2002            | Change %        |
+-----------------+-----------------+-----------------+-----------------+
| January         | 18.38           | 18.00           | (2.07)          |
+-----------------+-----------------+-----------------+-----------------+
| February        | 17.75           | 17.50           | (1.41)          |
+-----------------+-----------------+-----------------+-----------------+
| March           | 18.13           | 18.17           | 0.22            |
+-----------------+-----------------+-----------------+-----------------+
| April           | 19.80           | 19.75           | (0.25)          |
+-----------------+-----------------+-----------------+-----------------+
| May             | 22.14           | 20.30           | (8.31)          |
+-----------------+-----------------+-----------------+-----------------+
| June            | 18.75           | 20.25           | 8.00            |
+-----------------+-----------------+-----------------+-----------------+
| July            | 17.50           | 19.92           | 13.83           |
+-----------------+-----------------+-----------------+-----------------+
| August          | 19.13           | 20.71           | 8.26            |
+-----------------+-----------------+-----------------+-----------------+
| September       | 18.00           | 20.00           | 11.11           |
+-----------------+-----------------+-----------------+-----------------+
| October         | 18.50           | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+
| November        | 17.80           | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+
| December        | 18.50           | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+
| Annual Avg.     | 18.69           | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+

Source: UNA (National Poultry Association)

Avg. Exchange rate 2001 US \$1.00 = \$9.35 pesos

Avg. Exchange rate 2002 US \$1.00 = \$9.82 pesos

## [WHITE EGGS FARMGATE PRICES]{.smallcaps}

+-----------------+-----------------+-----------------+-----------------+
| White Eggs      |                 |                 |                 |
| Farmgate Prices |                 |                 |                 |
|                 |                 |                 |                 |
| Pesos/kilogram  |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Month           | 2001            | 2002            | Change %        |
+-----------------+-----------------+-----------------+-----------------+
| January         | 7.80            | 6.76            | (13.33)         |
+-----------------+-----------------+-----------------+-----------------+
| February        | 7.52            | 6.50            | (13.56)         |
+-----------------+-----------------+-----------------+-----------------+
| March           | 7.30            | 5.90            | (19.18)         |
+-----------------+-----------------+-----------------+-----------------+
| April           | 8.13            | 5.98            | (26.45)         |
+-----------------+-----------------+-----------------+-----------------+
| May             | 7.69            | 4.84            | (37.06)         |
+-----------------+-----------------+-----------------+-----------------+
| June            | 6.08            | 5.56            | (8.55)          |
+-----------------+-----------------+-----------------+-----------------+
| July            | 6.32            | 6.60            | 4.43            |
+-----------------+-----------------+-----------------+-----------------+
| August          | 7.85            | 7.91            | 0.76            |
+-----------------+-----------------+-----------------+-----------------+
| September       | 7.10            | 6.91            | (2.68)          |
+-----------------+-----------------+-----------------+-----------------+
| October         | 7.09            | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+
| November        | 7.00            | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+
| December        | 7.65            | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+
| Annual Avg.     | 7.29            | N/A             | N/A             |
+-----------------+-----------------+-----------------+-----------------+

Source: UNA (National Poultry Association)

Avg. Exchange rate 2001 US \$1.00 = \$9.35 pesos

Avg. Exchange rate 2002 US \$1.00 = \$9.82 pesos

## MEXICAN IMPORTS FOR SELECTED POULTRY PRODUCTS Jan-Sep 2002

  ----------------- ----------------------------------------- -----------
  H.S. Tariff       Description & Country of Origin           Volume MT
  Number                                                      

  0105.11.01        Day old chicks, which do not need feeding 
                    during transport                          

                    U.S.                                      1,004

                    GERMANY                                   91

                    OTHER                                     

                    SUBTOTAL (Thousand head)                  1,192

  0105.11.02        Breeding stock, layer-type with selected  
                    breed certificate when imports are no     
                    more of 15,000 heads in each operation    

                    U.S.                                      430

                    NETHERLANDS                               52

                    OTHER                                     44

                    SUBTOTAL (Thousand head)                  526

  0105.11.99        Other                                     

                    U.S. and subtotal                         0

  0105.19.99        Other (Chickens)                          

                    U.S.                                      1

                    OTHER                                     14

                    SUBTOTAL (Thousand head)                  15

  0207.11.01        Other fresh or chilled whole poultry      

                    U.S. and subtotal                         1,016

  0207.12.01        Other frozen whole poultry                

                    U.S.                                      239

                    CHILE                                     996

                    OTHER                                     7

                    SUBTOTAL                                  1,242

  0207.25.01        Whole frozen turkey                       

                    U.S.                                      105

                    CHILE                                     153

                    OTHER                                     1

                    SUBTOTAL                                  257

  0207.33.01        Whole ducks, geese & guineas frozen       

                    U.S.                                      449

                    OTHER                                     0

                    SUBTOTAL                                  449

  0207.26.01        Mechanically deboned turkey meat          

                    U.S. and subtotal                         3,031

  H.S. Tariff       Description & Country of Origin           Volume MT
  Number                                                      

  0207.26.99        Fresh & chilled turkey parts              

                    U.S.                                      49,788

                    SUBTOTAL                                  48,788

  0207.13.01        Mechanically deboned chicken meat fresh   
                    or Chilled                                

                    U.S. and subtotal                         50,724

  0207.14.01        Mechanically deboned chicken meat frozen  

                    U.S.                                      33,463

                    CHILE                                     2,120

                    SUBTOTAL                                  35,583

  0207.13.99        Fresh & chilled chicken parts             

                    U.S. and subtotal                         22,846

                                                              

  0207.14.99        Frozen poultry parts                      

                    U.S.                                      51,788

                    OTHER                                     1,747

                    SUBTOTAL                                  53,535

  0207.27.01        Mechanically deboned turkey meat, frozen  

                    U.S.                                      10,997

                    OTHER                                     1,123

                    SUBTOTAL                                  12,120

  0207.27.99        Frozen turkey parts                       

                    U.S.                                      35,397

                    OTHER                                     415

                    SUBTOTAL                                  35,812

  0207.36.99        Duck, geese or guineas cuts, frozen       

                    U.S. and subtotal                         6

  0207.14.02 &      Poultry livers                            
  0207.36.01                                                  

                    U.S. and subtotal                         1

  0407.00.01        Table eggs, fresh, including hatching     
                    eggs                                      

                    U.S.                                      2,567

                    OTHER                                     229

                    SUBTOTAL                                  2,796

  1602.31.01        Processed meat (Turkey)                   

                    U.S.                                      923

                    OTHER                                     11

                    SUBTOTAL                                  934

                                                              

  H.S. Tariff       Description & Country of Origin           Volume MT
  Number                                                      

  1602.39.99        Other processed poultry meat              

                    U.S.                                      66

                    OTHER                                     23

                    SUBTOTAL                                  89

  0207.13.02        Chicken carcasses                         

                    U.S.                                      12,885

                    OTHER                                     0

                    SUBTOTAL                                  12,885

  0207.14.03        Chicken carcasses                         

                    U.S.                                      0

                    OTHER                                     0

                    SUBTOTAL                                  0

  0207.26.02        Turkey carcasses                          

                    U.S.                                      0

                    OTHER                                     0

                    SUBTOTAL                                  0

  0207.27.03        Turkey carcasses                          

                    U.S.                                      0

                    OTHER                                     0

                    SUBTOTAL                                  0
  ----------------- ----------------------------------------- -----------

SOURCE: BANCOMEX, SEPTEMBER 2002.

## NAFTA POULTRY END EGGS TARIFF RATE QUOTAS FOR 2002

+---------------+---------+-------+------------+---+-------------+---+------+
| PRODUCT       | H.S.    | ORI   | ALLOCATION | T |             | \ |      |
|               |         | GINAL |            | O |             | % |      |
|               | Tariff  |       | MECHANISM  | T |             | f |      |
|               | Number  | MT    |            | A |             | i |      |
|               |         | TRQ   |            | L |             | l |      |
|               |         |       |            | I |             | l |      |
|               |         |       |            | M |             | e |      |
|               |         |       |            | P |             | d |      |
|               |         |       |            | O |             |   |      |
|               |         |       |            | R |             |   |      |
|               |         |       |            | T |             |   |      |
|               |         |       |            | S |             |   |      |
|               |         |       |            | ( |             |   |      |
|               |         |       |            | M |             |   |      |
|               |         |       |            | T |             |   |      |
|               |         |       |            | ) |             |   |      |
|               |         |       |            |   |             |   |      |
|               |         |       |            | S |             |   |      |
|               |         |       |            | e |             |   |      |
|               |         |       |            | p |             |   |      |
|               |         |       |            | t |             |   |      |
|               |         |       |            | e |             |   |      |
|               |         |       |            | m |             |   |      |
|               |         |       |            | b |             |   |      |
|               |         |       |            | e |             |   |      |
|               |         |       |            | r |             |   |      |
|               |         |       |            | 2 |             |   |      |
|               |         |       |            | 0 |             |   |      |
|               |         |       |            | 0 |             |   |      |
|               |         |       |            | 2 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| EGGS Fresh:   | 040     | 8,2   | Direct     | 2 |             | 3 |      |
|               | 7.00.01 | 33.95 | allocation | , |             | 1 |      |
| Border        |         |       | Auction    | 5 |             | . |      |
| regions a/    |         |       |            | 6 |             | 1 |      |
|               |         |       | Direct     | 7 |             | 7 |      |
| Other regions |         |       | allocation | . |             | % |      |
|               |         |       |            | 0 |             |   |      |
| Fertilized:   |         |       |            | 2 |             |   |      |
| Nationwide    |         |       |            |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
|               |         |       |            |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Whole fresh,  | 020     | 2,5   | Direct     | 1 |             | 7 |      |
| chilled &     | 7.24.01 | 33.53 | allocation | 9 |             | . |      |
| frozen turkey |         |       | to the     | 7 |             | 8 |      |
|               | 020     |       | border     | . |             | 0 |      |
|               | 7.25.01 |       | region and | 6 |             | % |      |
|               |         |       | the        | 6 |             |   |      |
|               |         |       | northern   |   |             |   |      |
|               |         |       | line b/.   |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
|               |         |       |            |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Other whole   | 020     | 16,4  | Direct     | 1 |             |   |      |
| Poultry       | 7.11.01 | 67.91 | allocation | , |             |   |      |
| (Broilers or  |         |       | to the     | 0 |             |   |      |
| hens) fresh,  | 020     |       | border     | 1 |             |   |      |
| chilled or    | 7.12.01 |       | region and | 5 |             |   |      |
| frozen)       |         |       | the        | . |             |   |      |
|               |         |       | northern   | 8 |             |   |      |
|               |         |       | border     | 7 |             |   |      |
|               |         |       | line.      |   |             |   |      |
|               |         |       |            | 2 |             |   |      |
|               |         |       |            | 3 |             |   |      |
|               |         |       |            | 8 |             |   |      |
|               |         |       |            | . |             |   |      |
|               |         |       |            | 5 |             |   |      |
|               |         |       |            | 1 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Total         |         |       |            | 1 |             | 7 |      |
|               |         |       |            | , |             | . |      |
|               |         |       |            | 2 |             | 6 |      |
|               |         |       |            | 5 |             | 1 |      |
|               |         |       |            | 4 |             | % |      |
|               |         |       |            | . |             |   |      |
|               |         |       |            | 3 |             |   |      |
|               |         |       |            | 8 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
|               |         |       |            |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Ducks ,geese, | 020     | 9     | A          | 0 |             |   |      |
| and guineas,  | 7.32.01 | 99.00 | nationwide | . |             |   |      |
| whole, fresh  |         |       | auction    | 0 |             |   |      |
|               | 020     |       | (only      |   |             |   |      |
| chilled or    | 7.33.01 |       | ducks,     | 4 |             |   |      |
| frozen        |         |       | geese,     | 4 |             |   |      |
|               |         |       |            | 9 |             |   |      |
|               |         |       | and        | . |             |   |      |
|               |         |       | guineas)   | 0 |             |   |      |
|               |         |       | c/         | 5 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Total         |         |       |            | 4 |             | 4 |      |
|               |         |       |            | 4 |             | 4 |      |
|               |         |       |            | 9 |             | . |      |
|               |         |       |            | . |             | 9 |      |
|               |         |       |            | 0 |             | 4 |      |
|               |         |       |            | 5 |             | % |      |
+---------------+---------+-------+------------+---+-------------+---+------+
|               |         |       |            |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Mechanically  | 020     | 34,2  | Direct     | 5 |             |   |      |
| Deboned Meat  | 7.13.01 | 02.66 | allocation | 0 |             |   |      |
|               |         |       | to sausage | , |             |   |      |
|               | 020     |       | companies  | 7 |             |   |      |
|               | 7.14.01 |       |            | 2 |             |   |      |
|               |         |       | and cold   | 3 |             |   |      |
|               | 020     |       | meat       | . |             |   |      |
|               | 7.26.01 |       | producers  | 3 |             |   |      |
|               |         |       |            | 7 |             |   |      |
|               | 020     |       | nationwide |   |             |   |      |
|               | 7.27.01 |       |            | 3 |             |   |      |
|               |         |       |            | 3 |             |   |      |
|               |         |       |            | , |             |   |      |
|               |         |       |            | 4 |             |   |      |
|               |         |       |            | 6 |             |   |      |
|               |         |       |            | 2 |             |   |      |
|               |         |       |            | . |             |   |      |
|               |         |       |            | 7 |             |   |      |
|               |         |       |            | 8 |             |   |      |
|               |         |       |            |   |             |   |      |
|               |         |       |            | 3 |             |   |      |
|               |         |       |            | , |             |   |      |
|               |         |       |            | 0 |             |   |      |
|               |         |       |            | 3 |             |   |      |
|               |         |       |            | 0 |             |   |      |
|               |         |       |            | . |             |   |      |
|               |         |       |            | 5 |             |   |      |
|               |         |       |            | 0 |             |   |      |
|               |         |       |            |   |             |   |      |
|               |         |       |            | 1 |             |   |      |
|               |         |       |            | 0 |             |   |      |
|               |         |       |            | , |             |   |      |
|               |         |       |            | 9 |             |   |      |
|               |         |       |            | 9 |             |   |      |
|               |         |       |            | 6 |             |   |      |
|               |         |       |            | . |             |   |      |
|               |         |       |            | 8 |             |   |      |
|               |         |       |            | 1 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Total         |         |       |            | 9 |             | 2 |      |
|               |         |       |            | 8 |             | 8 |      |
|               |         |       |            | , |             | 7 |      |
|               |         |       |            | 2 |             | . |      |
|               |         |       |            | 1 |             | 1 |      |
|               |         |       |            | 3 |             | 5 |      |
|               |         |       |            | . |             | % |      |
|               |         |       |            | 4 |             |   |      |
|               |         |       |            | 6 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
|               |         |       |            |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Fresh or      | 020     | 35,4  | Direct     | 4 |             |   |      |
| chilled       | 7.26.99 | 69.49 | allocation | 9 |             |   |      |
| Turkey parts  |         |       | to border  | , |             |   |      |
|               | 020     |       | region and | 7 |             |   |      |
| Frozen Turkey | 7.27.99 |       | the        | 8 |             |   |      |
| parts         |         |       | northern   | 8 |             |   |      |
|               |         |       | border     | . |             |   |      |
|               |         |       | line       | 2 |             |   |      |
|               |         |       |            | 7 |             |   |      |
|               |         |       | Direct     |   |             |   |      |
|               |         |       | allocation | 3 |             |   |      |
|               |         |       | to sausage | 5 |             |   |      |
|               |         |       | companies. | , |             |   |      |
|               |         |       |            | 3 |             |   |      |
|               |         |       |            | 9 |             |   |      |
|               |         |       |            | 6 |             |   |      |
|               |         |       |            | . |             |   |      |
|               |         |       |            | 8 |             |   |      |
|               |         |       |            | 7 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Total         |         |       |            | 4 |             | 2 |      |
|               |         |       |            | 5 |             | 4 |      |
|               |         |       |            | , |             | 0 |      |
|               |         |       |            | 1 |             | . |      |
|               |         |       |            | 8 |             | 1 |      |
|               |         |       |            | 5 |             | 1 |      |
|               |         |       |            | . |             | % |      |
|               |         |       |            | 1 |             |   |      |
|               |         |       |            | 4 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
|               |         |       |            |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| PRODUCT       | H.S.    | ORI   | ALLOCATION | T |             | \ |      |
|               |         | GINAL |            | O |             | % |      |
|               | Tariff  |       | MECHANISM  | T |             | f |      |
|               | Number  | MT    |            | A |             | i |      |
|               | mber    | TRQ   |            | L |             | l |      |
|               |         |       |            | I |             | l |      |
|               |         |       |            | M |             | e |      |
|               |         |       |            | P |             | d |      |
|               |         |       |            | O |             |   |      |
|               |         |       |            | R |             |   |      |
|               |         |       |            | T |             |   |      |
|               |         |       |            | S |             |   |      |
|               |         |       |            | ( |             |   |      |
|               |         |       |            | M |             |   |      |
|               |         |       |            | T |             |   |      |
|               |         |       |            | ) |             |   |      |
|               |         |       |            |   |             |   |      |
|               |         |       |            | D |             |   |      |
|               |         |       |            | e |             |   |      |
|               |         |       |            | c |             |   |      |
|               |         |       |            | e |             |   |      |
|               |         |       |            | m |             |   |      |
|               |         |       |            | b |             |   |      |
|               |         |       |            | e |             |   |      |
|               |         |       |            | r |             |   |      |
|               |         |       |            | 2 |             |   |      |
|               |         |       |            | 0 |             |   |      |
|               |         |       |            | 0 |             |   |      |
|               |         |       |            | 2 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Poultry cuts  | 020     | 30,6  | Direct     | 2 |             |   |      |
| (broilers or  | 7.13.99 | 08.34 | allocation | 2 |             |   |      |
| hens) fresh,  |         |       | to border  | , |             |   |      |
| chilled or    | 020     |       | region and | 8 |             |   |      |
|               | 7.14.99 |       |            | 4 |             |   |      |
| Frozen        |         |       | the        | 6 |             |   |      |
|               |         |       | northern   | . |             |   |      |
|               |         |       |            | 1 |             |   |      |
|               |         |       | border     | 9 |             |   |      |
|               |         |       | line       |   |             |   |      |
|               |         |       |            | 5 |             |   |      |
|               |         |       |            | 1 |             |   |      |
|               |         |       |            | , |             |   |      |
|               |         |       |            | 7 |             |   |      |
|               |         |       |            | 8 |             |   |      |
|               |         |       |            | 7 |             |   |      |
|               |         |       |            | . |             |   |      |
|               |         |       |            | 6 |             |   |      |
|               |         |       |            | 9 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Total         |         |       |            | 7 |             | 2 |      |
|               |         |       |            | 4 |             | 4 |      |
|               |         |       |            | , |             | 3 |      |
|               |         |       |            | 6 |             | . |      |
|               |         |       |            | 3 |             | 8 |      |
|               |         |       |            | 3 |             | 3 |      |
|               |         |       |            | . |             | % |      |
|               |         |       |            | 8 |             |   |      |
|               |         |       |            | 8 |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
|               |         |       |            |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Duck, goose   | 020     | 10.00 | (only      |   | 0.00        |   |      |
| and guinea    | 7.35.99 |       | ducks,     |   |             |   |      |
| cuts, fresh   |         |       | geese and  |   | 5.83        |   |      |
| chilled or    | 020     |       | guineas)   |   |             |   |      |
| frozen        | 7.36.99 |       | d/         |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| Total         |         |       |            |   | 5.83        |   | 58   |
|               |         |       |            |   |             |   | .03% |
+---------------+---------+-------+------------+---+-------------+---+------+
| Source: UNA   |         |       |            |   |             |   |      |
| (Based on     |         |       |            |   |             |   |      |
| data from     |         |       |            |   |             |   |      |
| General       |         |       |            |   |             |   |      |
| Customs       |         |       |            |   |             |   |      |
| Administra    |         |       |            |   |             |   |      |
| tion‑Treasury |         |       |            |   |             |   |      |
| Minister,     |         |       |            |   |             |   |      |
| SHCP)         |         |       |            |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+
| a/ Border     |         |       |            |   |             |   |      |
| region:       |         |       |            |   |             |   |      |
| Includes      |         |       |            |   |             |   |      |
| states of     |         |       |            |   |             |   |      |
| Baja          |         |       |            |   |             |   |      |
| California,   |         |       |            |   |             |   |      |
| Baja          |         |       |            |   |             |   |      |
| California    |         |       |            |   |             |   |      |
| Sur,          |         |       |            |   |             |   |      |
|               |         |       |            |   |             |   |      |
| Quintana Roo  |         |       |            |   |             |   |      |
| and a portion |         |       |            |   |             |   |      |
| of the state  |         |       |            |   |             |   |      |
| of Sonora;    |         |       |            |   |             |   |      |
| the southern  |         |       |            |   |             |   |      |
| border        |         |       |            |   |             |   |      |
|               |         |       |            |   |             |   |      |
| region along  |         |       |            |   |             |   |      |
| with          |         |       |            |   |             |   |      |
| Guatemala and |         |       |            |   |             |   |      |
| the           |         |       |            |   |             |   |      |
| m             |         |       |            |   |             |   |      |
| unicipalities |         |       |            |   |             |   |      |
| (counties) of |         |       |            |   |             |   |      |
| Comitan       |         |       |            |   |             |   |      |
|               |         |       |            |   |             |   |      |
| de Dominguez, |         |       |            |   |             |   |      |
| Chiapas and   |         |       |            |   |             |   |      |
| Salina Cruz,  |         |       |            |   |             |   |      |
| Oaxaca. This  |         |       |            |   |             |   |      |
| region        |         |       |            |   |             |   |      |
| included      |         |       |            |   |             |   |      |
| former        |         |       |            |   |             |   |      |
| free‑trade    |         |       |            |   |             |   |      |
| border areas. |         |       |            |   |             |   |      |
|               |         |       |            |   |             |   |      |
| b/ Northern   |         |       |            |   |             |   |      |
| border line:  |         |       |            |   |             |   |      |
| The Mexican   |         |       |            |   |             |   |      |
| territory     |         |       |            |   |             |   |      |
| between the   |         |       |            |   |             |   |      |
| International |         |       |            |   |             |   |      |
| line with the |         |       |            |   |             |   |      |
| US.           |         |       |            |   |             |   |      |
|               |         |       |            |   |             |   |      |
| and a 20 km   |         |       |            |   |             |   |      |
| parallel line |         |       |            |   |             |   |      |
| from the      |         |       |            |   |             |   |      |
| International |         |       |            |   |             |   |      |
| limit,        |         |       |            |   |             |   |      |
| including a   |         |       |            |   |             |   |      |
| portion of    |         |       |            |   |             |   |      |
| the state of  |         |       |            |   |             |   |      |
|               |         |       |            |   |             |   |      |
| Sonora and    |         |       |            |   |             |   |      |
| the Gulf of   |         |       |            |   |             |   |      |
| Mexico, and   |         |       |            |   |             |   |      |
| the           |         |       |            |   |             |   |      |
| municipality  |         |       |            |   |             |   |      |
| (county) of   |         |       |            |   |             |   |      |
| Cananea,      |         |       |            |   |             |   |      |
| Sonora.       |         |       |            |   |             |   |      |
|               |         |       |            |   |             |   |      |
| c/ Whole      |         |       |            |   |             |   |      |
| ducks, geese, |         |       |            |   |             |   |      |
| and guineas   |         |       |            |   |             |   |      |
| TRQ is part   |         |       |            |   |             |   |      |
| of the Other  |         |       |            |   |             |   |      |
| Whole Poultry |         |       |            |   |             |   |      |
| TRQ.          |         |       |            |   |             |   |      |
|               |         |       |            |   |             |   |      |
| d/ Cuts of    |         |       |            |   |             |   |      |
| ducks, geese, |         |       |            |   |             |   |      |
| and guineas   |         |       |            |   |             |   |      |
| TRQ is part   |         |       |            |   |             |   |      |
| of the        |         |       |            |   |             |   |      |
| Poultry Cuts  |         |       |            |   |             |   |      |
| TRQ.          |         |       |            |   |             |   |      |
+---------------+---------+-------+------------+---+-------------+---+------+

  -------------- ---------------- -------------------- -------------------
  TARIFF                                               
  REDUCTIONS FOR                                       
  NAFTA POULTRY                                        
  PRODUCTS                                             

  Year           Shell Eggs       Poultry Meat         Turkey Meat

  0              50%              260%                 133%

  1/ JAN 1994    48%              249.6%               127.68%

  2/ JAN 1995    46%              239.2%               122.36%

  3/ JAN 1996    44%              228.8%               117.04%

  4/ JAN 1997    42%              218.4%               111.72%

  5/ JAN 1998    40%              208.0%               106.40%

  6/ JAN 1999    38%              197.6%               101.08%

  7/ JAN 2000    28.5%            148.2%               75.81%

  8/ JAN 2001    19%              98.80%               50.54%

  9/ JAN 2002    9.5%             49.40%               25.27%

  10/ JAN 2003   0%               0%                   0%
  -------------- ---------------- -------------------- -------------------

Including fertilized or hatching eggs.

Other whole poultry, other poultry parts, turkey cuts, MDM ( MDC or MDT)

Whole turkey

  -----------------------------------------------------------------------
  2002 NAFTA TARIFF RATE‑QUOTAS                      
  -------------------------------------------------- --------------------
  PRODUCT                                            TRQs (MT)

  Whole Turkey                                       2,533.3

  Other Whole Poultry                                16,467.9

  Turkey Parts and Offal                             35,469.3

  Other Poultry parts and Offal                      30,608.3

  Mechanically Deboned Meat                          34,202.7

  TOTAL                                              119,281.5
  -----------------------------------------------------------------------

  --------------------------------------------- -------------------------
  MEXICO: POULTRY NUMBERS, 2001                 

  Type of Bird                                  Thousand of Head

  Laying Hens in production\*                   113,590

  Pullets in grow out                           34,077

  Light Breeding Hens in production             825

  Light Breeding Hens in grow out               376

  Light Progenitor Hens in production           0

  Light Progenitor Hens in grow out             0

  Heavy Breeder Hens in production              8,659

  Heavy Breeder Hens in grow out                5,722

  Heavy Progenitor Hens in production           165

  Heavy Progenitor Hens in grow out             113

  Broilers (Per cycle)                          216,561

  Turkeys (Per cycle)                           801

  Total Poultry Flock                           380,889
  --------------------------------------------- -------------------------

\*There are an estimated 19 million laying hens in the second cycle

Source: UNA (National Poultry Association)

  -------------------------- ----------- ----------- ----------- -----------
  PER CAPITA CONSUMPTION                                         

  Products / pounds-         2000        2001        2002\*      2003\*

  EGGS                       43.87       44.50       44.54       44.76

  CHICKEN MEAT               43.87       45.97       47.80       49.30

  TURKEY MEAT\*\*            3.57        4.18        4.29        4.41
  -------------------------- ----------- ----------- ----------- -----------

Source: UNA (National Poultry Association)

\*Forecast

\*\*Includes whole turkey, turkey parts and processed products.

+----------+-------------------------------+--------+--------+--------+
| S        |                               |        |        |        |
| TRATEGIC |                               |        |        |        |
| I        |                               |        |        |        |
| NDICATOR |                               |        |        |        |
| TABLE:   |                               |        |        |        |
| POULTRY  |                               |        |        |        |
| PRODUCTS |                               |        |        |        |
| TARIFFS  |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
|          |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| Country: |                               |        |        |        |
| Mexico   |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| Report   |                               |        |        |        |
| Year:    |                               |        |        |        |
| 2002     |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
|          |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| H.S.     | Product                       | Tariff | TRQ    | If     |
|          |                               |        |        |        |
|          | Description                   | c      |        | Filled |
|          |                               | urrent |        | TRQ    |
|          |                               |        |        |        |
|          |                               | Year   |        |        |
+----------+-------------------------------+--------+--------+--------+
|          |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
|          |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
|          |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 01       | Day old chicks, which do not  | 5.0    | N/A    | N/A    |
| 05.11.01 |                               |        |        |        |
|          | need feeding during transport |        |        |        |
+----------+-------------------------------+--------+--------+--------+
|          |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 01       | Breeding stock, layer‑type    | Ex     | N/A    | N/A    |
| 05.11.02 | with                          |        |        |        |
|          |                               |        |        |        |
|          | selected breed certificate    |        |        |        |
|          | when                          |        |        |        |
|          |                               |        |        |        |
|          | imports are no more of 15,000 |        |        |        |
|          |                               |        |        |        |
|          | heads in each operation       |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 01       | Other                         | 1.0    | N/A    | N/A    |
| 05.11.99 |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 01       | Other (Chickens)              | 1.0    | N/A    | N/A    |
| 05.19.99 |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Other fresh or chilled whole  | Ex     | 16     | 49.4   |
| 07.11.01 | poultry                       |        | ,467.9 |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Other frozen whole poultry    | Ex     |        |        |
| 07.12.01 |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Whole poultry fresh, ducks,   | Ex     |        |        |
| 07.32.01 | geese & guineas               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Whole poultry frozen, ducks,  | Ex     |        |        |
| 07.33.01 | geese & guineas               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Fresh & chilled chicken parts | Ex     | 30     | 49.4   |
| 07.13.99 |                               |        | ,608.3 |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Frozen poultry parts          | Ex     |        |        |
| 07.14.99 |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Fresh & chilled turkey parts  | Ex     | 35     | 49.4   |
| 07.26.99 |                               |        | ,469.4 |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Frozen turkey parts           | Ex     |        |        |
| 07.27.99 |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Whole fresh turkey            | Ex     | 2      | 25.2   |
| 07.24.01 |                               |        | ,533.3 |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Whole frozen turkey           | Ex     |        |        |
| 07.25.01 |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Mechanically deboned chicken  | Ex     | 3      | 49.4   |
| 07.13.01 | meat fresh or chilled         |        | 4,02.7 |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Mechanically deboned chicken  | Ex     |        |        |
| 07.14.01 | meat frozen                   |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Mechanically deboned turkey   | Ex     |        |        |
| 07.26.01 | meat                          |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 02       | Mechanically deboned turkey   | Ex     |        |        |
| 07.27.01 | meat,frozen                   |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 04       | Table eggs, fresh, including  | Ex     | 8      | 9.5    |
| 07.00.01 | hatching eggs                 |        | ,233.9 |        |
+----------+-------------------------------+--------+--------+--------+
| 16       | Processed meat (Turkey)       | 2.0    | N/A    | N/A    |
| 02.31.01 |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+
| 16       | Other processed poultry meat  | 2.0    | N/A    | N/A    |
| 02.39.99 |                               |        |        |        |
+----------+-------------------------------+--------+--------+--------+

  -------------------------- -------------- -------------- --------------
  Exchange Rate Table                                      

  Month                      2000           2001           2002

  January                    9.02           9.76           9.16

  February                   9.43           9.70           9.10

  March                      9.28           9.60           9.07

  April                      9.37           9.33           9.14

  May                        9.50           9.14           9.49

  June                       9.81           9.09           9.75

  July                       9.43           9.15           9.79

  August                     9.27           9.12           9.83

  September                  9.33           9.40           10.05

  October                    9.52           9.45           10.09

  November                   9.50           9.25           10.19

  December                   9.44           9.16           10.21

  **Annual Avg.**            **9.40**       **9.35**       **9.82**
  -------------------------- -------------- -------------- --------------

Source: Mexican Federal Register

Note: Monthly rates are averages of daily exchange rates from the Banco
de Mexico.

# SECTION III. Narrative on Supply and Demand, Policy & Marketing

## CHICKEN MEAT

## PRODUCTION

The forecast of MY 2003 Mexican chicken meat production remains
unchanged, up five percent from a year ago. Despite the slowdown in the
economy during 2002, chicken producers continue to face favorable demand
for their products. Major producers continue to be in a good financial
position that has allowed them to afford the increase in feed prices,
particularly for imported feed ingredients and animal feed. It is
estimated that feed costs represent nearly 55 percent of the total
production cost for chicken meat production. Also, nearly 50 percent of
total feedstuffs consumed by the poultry sector are imported. However,
increased vertical integration in the industry is helping to lower
production costs.

Other factors that favored chicken meat producers are the stable peso
exchange rate and the expected economic recovery in Mexico, which should
help producers to increase output in 2003. Industry consolidation has
continued and it is expected that the expansion of large vertically
integrated companies will continue through growing investment in very
large-scale production operations. Moreover, advances in genetics,
nutrition, and equipment have allowed the chicken industry to increase
its productivity and competitiveness.

+-------------------------------------+----------------+---------------+
| CHICKEN FEED CONSUMPTION            |                |               |
|                                     |                |               |
| (Million MT)                        |                |               |
+-------------------------------------+----------------+---------------+
|                                     | 2002           | 2003\*        |
+-------------------------------------+----------------+---------------+
| Feed Grain                          | 7.63           | 7.86          |
+-------------------------------------+----------------+---------------+
| Oilseeds                            | 2.58           | 2.74          |
+-------------------------------------+----------------+---------------+
| Other Ingredients                   | 1.99           | 2.00          |
+-------------------------------------+----------------+---------------+
| TOTAL                               | 12.2           | 12.6          |
+-------------------------------------+----------------+---------------+

> \* Forecast
>
> Source: National Poultry Association (UNA)

Chicken meat production is concentrated mainly in eleven states, located
in the center of the country: Queretaro (11%), Jalisco (11%), Veracruz
(11%), Puebla (8%), the zone of the Laguna Region (10%), Nuevo Leon
(7%), Sate of Mexico (6%), Guanajuato (5%), Yucatan (4%) Aguascalientes
(7%) and Sinaloa (5%).

## CONSUMPTION

Factors such as growing demand for meat in general, improved quality,
affordable prices relative to other meats, and growing consumer
awareness of the advantage of eating low fat meat are all helping to
spur consumption of chicken. The National Poultry Association (UNA)
forecasts that chicken meat consumption for 2003 will increase to
approximately 49.30 pounds per capita from 47.80 pounds per capita in
2002.

The poultry meat consumption estimate for MY 2002 was adjusted downward
reflecting higher retail prices and revised data from the poultry
industry. Despite the fact that the MY 2003 chicken meat consumption
forecast was reduced, it is five percent higher than the revised
estimate for MY 2002. Industry sources estimate that chicken prices
could increase slightly if Mexico continues to impose import
restrictions because of Avian Influenza (AI), Listeria, and other
sanitary issues (see Trade, Quality, Safety & Health Sections). As
result, Mexican retailers will have to buy more domestic product to
compensate for lost imports. Reportedly, in the Mexican border state
markets, for example, chicken leg quarter prices have increased
substantially as a result of these import requirements.

Roasting chickens (whole chicken without offal) account for 26 percent
of chicken meat consumption, while chicken sold in wet markets and
stalls (whole chicken including offal) account for approximately 28
percent of the total. Live birds represent 31 percent of total chicken
meat consumption. Only five percent is purchased in supermarkets (whole
chicken without offal), and chicken cuts accounted for just 8.5 percent
of total consumption in 2002.

In 2002, UNA together with the Secretariat of Agriculture, Livestock,
Rural Development, Fisheries and Food (SAGARPA), conducted a generic
advertising campaign to increase domestic consumption of chicken
products. The campaign included radio and press promotions. According to
UNA, these types of campaigns have been traditionally sponsored by
SAGARPA, with fairly good results in terms of consumer awareness on the
benefits of chicken meat consumption. Reportedly, a new campaign will be
launched in 2003. UNA sources also stated that the increase in the
chicken meat production estimate for MY 2003 reflects continued demand
for poultry relative to other more expensive meats. According to UNA
data, for example, 6 of every 10 kg of livestock products that Mexicans
consume are poultry meat or eggs.

## TRADE

Due to the quarantine requirements implemented by the GOM on imported
products, the estimates for poultry meat imports for 2002 and 2003 have
been revised downward. Currently, any raw product for direct consumption
moving beyond the 20 km border area or Cancun must undergo two different
flock tests for AI -- the standard agar gel test and the
hemagglutination inhibition test (HI). Although most companies that
export to Mexico already conduct the agar gel test, the HI test is
costly and is not widely performed in the United States (see MX 2086, MX
2124 and MX 2166).

In a recent development affecting U.S. market access for poultry
products, SAGARPA published on November 25, 2002 in the *Diario Oficial*
(Federal Register), an announcement extending the Official Mexican
Emergency Regulation NOM-EM-016-ZOO-2002, "National Campaign against
Avian Influenza" published on May 24, 2002. NOM-016 will continue to be
enforced for an additional six months, from November 25, 2002. The
announcement means that the HI test will be required for all imports of
raw poultry for retail when products are marketed in the interior of
Mexico. The ban on imports of raw poultry for retail, hatching and table
eggs, and live birds from the eight U.S. states (Texas, California,
Maine, Virginia, Connecticut, Pennsylvania, North Carolina and West
Virginia) where AI was detected continues. Officials at SAGARPA have
requested additional information and clarification concerning
eradication procedures from the Animal and Plant Health Inspection
Service before clearing the eight states.

The domestic poultry industry has encouraged the GOM to enforce all
animal health and food safety standards in order to ensure that imported
foods are safe and subject to the same requirements as domestic
products. Reports indicate that the industry reluctantly supported
SAGARPA's proposal to remove the HI test when importing US raw poultry
for retail in the border area, ostensibly to control the smuggling of
raw poultry. The HI testing issue has adversely affected imports of US
poultry in brine (imports of which had increased considerably in recent
years because they were not subject to tariff-rate quota provisions) and
duck meat that were commonly marketed in the interior of Mexico.

The domestic industry is also warily watching emerging players in the
international poultry arena such as Brazil and China, and will likely
work with the GOM to ensure that all the proper food safety and animal
health procedures are in place and enforced in the event that imports
from these origins become a possibility.

## POLICY

On November 22, 2002, the Secretariat Economy (SE) published, in the
*Diario Oficial* (Federal Register), the Resolution accepting the
request of the national poultry association (UNA), and beginning the
investigation of bilateral safeguard measures on imported U.S. chicken
leg quarters, classified under tariffs 0207.13.99 and 0207.14.99.
According to the Resolution, the time frame for the investigation will
be from 1997 to 2001, along with trade projections for 2002 and 2003
(See MX 2166). Based on NAFTA, there will be a public hearing on July
14, 2003. On January 22, 2003 SE announced a provisional safeguard
tariff that will be in place for up to six months. According to SE
announcement, Mexico will allow 50,000 MT of U.S. chicken leg quarters
into Mexico duty-free over the next six months and will impose a
temporary, or provisional, safeguard tariff of 98.8 percent on imports
of chicken leg quarters above that level. All other U.S. poultry exports
will continue to enter Mexico duty free. SE has yet to establish how
this TRQ will be administered. Industry sources indicate, however, that
this TRQ will be administered as in 2001, by direct allocation to the
border region and northern borderline. The decree indicates that the
safeguard and the TRQ were established with the objective to maintain a
certain degree of protection equivalent to the protections that were in
place in 2001.

In its request, UNA is demanding that SE impose a bilateral safeguard
that is consistent with NAFTA rules to establish a tariff rate quota for
chicken leg quarters through January 1, 2008. Under UNA's proposal, the
safeguard would only affect trade in chicken leg quarters; trade in
other poultry items would be unaffected, and the tariffs on other
products would be eliminated effective January 1, 2003. UNA is
requesting the safeguard because of its concerns that duty-free imports
of U.S. chicken leg quarters could injure the domestic industry.
Moreover, UNA claims that they are not prepared to compete against
imported products, particularly chicken leg quarters due to higher local
production costs than in the United States. According to UNA, local
production costs are 65 percent higher in broilers and 21 percent higher
in table eggs than those in the United States

## QUALITY, SAFETY & HEALTH

Mexico recently established testing procedures for Listeria. On November
27, 2002, SAGARPA informed the Food Safety Inspection Service (FSIS) via
letter that it was going to implement a testing program for listeria in
response to recent detections of listeria in the United States. The
letter defines the products to be tested as "hamburgers, nuggets, cold
cuts, or any other prepared chicken and turkey product ready for human
consumption." The Office of Agricultural Affairs understands SAGARPA's
use of the word "hamburger" to include chicken and/or turkey burgers in
this case. The testing procedure will take 4-12 working days, although,
shipments will be permitted to enter prior to the receipt of final test
results. Exporters should plan on this procedure being in place
indefinitely (See MX 2168).

Additionally, the Government of Mexico has specified new import
requirements resulting from the detection of Exotic New Castle Disease
in California and Nevada. At the writing of this report, imports from
California and Nevada are banned and the states of Oregon, Utah,
Arizona, and Idaho are under review. More detailed information
concerning the New Castle import requirements will be provided in a
separate report.

## 

## 

## TURKEY MEAT

## PRODUCTION

The MY 2003 forecasts for turkey meat production remains unchanged, up
four percent from MY 2002. Mexican production continues to be hampered
by limited economies of scale and integration. In addition, domestic
firms continue to produce whole turkeys for consumption only during the
Christmas season. At the same time, production of domestic turkey meat
parts for further processing is negligible.

## CONSUMPTION

Overall turkey consumption estimates were revised downward for MY 2002
based on the most recent industry information. Similarly, the
consumption forecast for MY 2003 has been revised downward due to
ongoing animal health and food safety regulations, which could slow down
imports of U.S. turkey products. As processed turkey products are
relatively price elastic, these safety regulations could restrict import
supplies and increase prices. This will likely affect consumption,
particularly in low-income classes. Nevertheless, UNA estimates that
average per capita consumption is expected to increase in 2003 to 4.41
pounds from 4.29 pounds in 2002 and includes whole turkey, turkey cuts,
and other turkey-imported products. Population growth and relatively
affordable relative prices with other meat are also expected to spur
demand. Mexican demand for whole turkeys is at its peak during the
Christmas holiday, a large part of which are imported from the U.S. Both
importers and distributors indicate that these seasonal imports
represent 40‑50 percent of annual demand, mainly for smaller birds that
are not popular in the U.S.

## TRADE

The estimate of turkey meat imports for MY 2003 was lowered based on the
expectation that ongoing sanitary measures will slow trade to some
degree. Turkey meat import estimates for MY 2002 have been updated to
reflect official government data. According to available information
Mexico is the most important market for the U.S. turkey meat. However,
for the first ten months of CY 2002, U.S. turkey exports declined 9
percent over the same period in CY 2001. The technical regulations that
Mexico imposed on imported products are affecting fresh turkey meat
imports from the U.S. (See Chicken Trade Section). Also, imports from
Chile continue to be banned due to an earlier outbreak of AI. This
situation should remain unchanged in the near future as Chilean
officials work with officials at SAGARPA to since Chile has been pending
to deliver detailed information on the status of the AI outbreak to
SAGARPA.