""

Required Report - public distribution

**Date:** 10/29/2003

**GAIN Report Number:** MX3147

MX3147

**Mexico**

**Citrus**

**Annual**

**2003**

**Approved by:**

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

#### Mexico City

**Prepared by:**

Dulce Flores

**Report Highlights:**

Fresh orange, grapefruit and lime production is forecast to increase for
MY 2003/04, due to better weather conditions. Fresh concentrate orange
juice production is also forecast to increase for MY 2004, but lower
international prices could limit production. Exports for all products
are expected to increase for MY 2003/04.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Mexico \[MX1\]

\[MX\]

Table of Contents

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

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

[FRESH ORANGE TABLE 4](#fresh-orange-table)

[Fresh Citrus, Other Table 5](#fresh-citrus-other-table)

[Fresh Citrus, Other Table **Error! Bookmark not
defined.**](#__RefHeading___Toc55206040)

[Fresh Grapefruit Table 6](#fresh-grapefruit-table)

[Fresh Concentrate Orange Juice 7](#fresh-concentrate-orange-juice)

[Key Lime Wholesale Prices 8](#key-lime-wholesale-prices)

[Persian Lime Wholesale Prices 8](#persian-lime-wholesale-prices)

[Wholesale Orange Prices 9](#wholesale-orange-prices)

[Grapefruit Wholesale Prices 9](#grapefruit-wholesale-prices)

[Monthly Exchange Rate Averages 10](#monthly-exchange-rate-averages)

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

[FRESH ORANGES 11](#fresh-oranges)

[PRODUCTION 11](#production)

[CONSUMPTION 12](#consumption)

[TRADE 12](#trade)

[MARKETING 13](#marketing)

[FRESH CITRUS, OTHER 13](#fresh-citrus-other)

[PRODUCTION 13](#production-1)

[CONSUMPTION 14](#consumption-1)

[TRADE 15](#trade-1)

[FRESH GRAPEFRUIT 15](#fresh-grapefruit)

[PRODUCTION 15](#production-2)

[CONSUMPTION 16](#consumption-2)

[TRADE 16](#trade-2)

[FROZEN CONCENTRATE ORANGE JUICE 17](#frozen-concentrate-orange-juice)

[PRODUCTION 17](#production-3)

[CONSUMPTION 17](#consumption-3)

[TRADE 17](#trade-3)

# Section I. Situation and Outlook

The citrus area is recovering from the dry weather conditions that
prevailed along the Gulf of Mexico during MY 2002/03; these conditions
affected orange production more than grapefruit or lime production. The
fresh orange production forecast for MY 2003/04 is 3.4 MMT, an increase
of 13 percent compared to the MY 2002/03 production estimate. Frozen
concentrate orange juice (FCOJ) production for MY 2004 is forecast to
increase slightly because of more available fresh oranges.

Total production of Key Limes and Persian Limes for MY 2003/04 is
forecast at 1.8 MMT, 6 percent higher than MY 2002/03, due to more
acreage coming into production. Persian and Key Lime exports for MY
2003/04 are forecast to increase to 335,000 MT. Grapefruit production
for MY 2003/04 is forecast at 312,000 MT. Grapefruit from the states in
the Gulf of Mexico are also recovering from the past dry weather
conditions. Grapefruit production in the state of Michoacan, which was
not affected by the dry weather conditions, is increasing. Grapefruit
exports for MY 2003/04 are forecast to reach 4,000 MT. According to
growers, grapefruit demand from the European market has been growing
steadily.

# Section II. Statistical Tables

## FRESH ORANGE TABLE

+------------+--------+---------+--------+---------+--------+---------+
| PSD Table  |        |         |        |         |        |         |
+------------+--------+---------+--------+---------+--------+---------+
| Country    | Mexico |         |        |         |        |         |
+------------+--------+---------+--------+---------+--------+---------+
| ######     | Fresh  |         |        | (       |        |         |
|  Commodity | O      |         |        | HECTARE |        |         |
|            | ranges |         |        | S)(1000 |        |         |
|            |        |         |        | TREE    |        |         |
|            |        |         |        | S)(1000 |        |         |
|            |        |         |        | MT)     |        |         |
+------------+--------+---------+--------+---------+--------+---------+
|            | 2001   |         | 2002   |         | 2003   |         |
|            | R      |         | Es     |         | Fo     |         |
|            | evised |         | timate |         | recast |         |
+------------+--------+---------+--------+---------+--------+---------+
|            | USDA   | Post    | USDA   | Post    | USDA   | Post    |
|            | Of     | E       | Of     | E       | Of     | E       |
|            | ficial | stimate | ficial | stimate | ficial | stimate |
|            | \      | \[New\] | \      | \[New\] | \      | \[New\] |
|            | [Old\] |         | [Old\] |         | [Old\] |         |
+------------+--------+---------+--------+---------+--------+---------+
| Market     | 1      |         | 1      |         | 1      |         |
| Year Begin | 1/2001 |         | 1/2002 |         | 1/2003 |         |
+------------+--------+---------+--------+---------+--------+---------+
| Area       | 347633 | 349237  | 347700 | 352000  | 0      | 350000  |
| Planted    |        |         |        |         |        |         |
+------------+--------+---------+--------+---------+--------+---------+
| Area       | 321871 | 334767  | 320000 | 301000  | 0      | 320000  |
| Harvested  |        |         |        |         |        |         |
+------------+--------+---------+--------+---------+--------+---------+
| Bearing    | 65018  | 67623   | 64640  | 60802   | 0      | 64640   |
| Trees      |        |         |        |         |        |         |
+------------+--------+---------+--------+---------+--------+---------+
| N          | 5204   | 2923    | 5595   | 10302   | 0      | 6060    |
| on-Bearing |        |         |        |         |        |         |
| Trees      |        |         |        |         |        |         |
+------------+--------+---------+--------+---------+--------+---------+
| TOTAL No.  | 70222  | 70546   | 70235  | 71104   | 0      | 70700   |
| Of Trees   |        |         |        |         |        |         |
+------------+--------+---------+--------+---------+--------+---------+
| Production | 3844   | 4020    | 3600   | 3000    | 0      | 3400    |
+------------+--------+---------+--------+---------+--------+---------+
| Imports    | 27     | 27      | 32     | 32      | 0      | 32      |
+------------+--------+---------+--------+---------+--------+---------+
| TOTAL      | 3871   | 4047    | 3632   | 3032    | 0      | 3432    |
| SUPPLY     |        |         |        |         |        |         |
+------------+--------+---------+--------+---------+--------+---------+
| Exports    | 18     | 18      | 17     | 8       | 0      | 10      |
+------------+--------+---------+--------+---------+--------+---------+
| Fresh Dom. | 3353   | 3689    | 3465   | 2894    | 0      | 3222    |
| C          |        |         |        |         |        |         |
| onsumption |        |         |        |         |        |         |
+------------+--------+---------+--------+---------+--------+---------+
| Processing | 500    | 340     | 150    | 130     | 0      | 200     |
+------------+--------+---------+--------+---------+--------+---------+
| TOTAL      | 3871   | 4047    | 3632   | 3032    | 0      | 3432    |
| DI         |        |         |        |         |        |         |
| STRIBUTION |        |         |        |         |        |         |
+------------+--------+---------+--------+---------+--------+---------+

## Fresh Citrus, Other Table

  -------------- -------------- ---------- ---------- ----------------- ---------- ----------
  PSD Table                                                                        

  Country        Mexico                                                            

  Commodity      Fresh                                (HECTARES)(1000              
                 Citrus,Other                         TREES) (1000 MT)             

                 2001 Revised              2002                         2003       
                                           Estimate                     Forecast   

                 USDA Official  Post       USDA       Post Estimate     USDA       Post
                 \[Old\]        Estimate   Official   \[New\]           Official   Estimate
                                \[New\]    \[Old\]                      \[Old\]    \[New\]

  Market Year    11/2001                   11/2002                      11/2003    
  Begin                                                                            

  Area Planted   138000         138100     140000     141000            0          142000

  Area Harvested 127000         125515     129000     126000            0          127500

  Bearing Trees  24765          24475      25155      24570             0          24862

  Non-Bearing    2134           2454       2134       2925              0          14500
  Trees                                                                            

  TOTAL No. Of   26899          26929      27289      27495             0          39362
  Trees                                                                            

  Production     1600           1680       1620       1700              0          1800

  Imports        1              1          1          1                 0          1

  TOTAL SUPPLY   1601           1681       1621       1701              0          1801

  Exports        240            198        245        330               0          335

  Fresh Dom.     1105           1225       1116       1111              0          1196
  Consumption                                                                      

  Processing     256            258        260        260               0          270

  TOTAL          1601           1681       1621       1701              0          1801
  DISTRIBUTION                                                                     
  -------------- -------------- ---------- ---------- ----------------- ---------- ----------

## Fresh Grapefruit Table

  -------------- ------------ ---------- ---------- ----------------- ---------- ----------
  PSD Table                                                                      

  Country        Mexico                                                          

  Commodity      Fresh                              (HECTARES)(1000              
                 Grapefruit                         TREES) (1000 MT)             

                 2001 Revised            2002                         2003       
                                         Estimate                     Forecast   

                 USDA         Post       USDA       Post Estimate     USDA       Post
                 Official     Estimate   Official   \[New\]           Official   Estimate
                 \[Old\]      \[New\]    \[Old\]                      \[Old\]    \[New\]

  Market Year    11/2001                 11/2002                      11/2003    
  Begin                                                                          

  Area Planted   14700        15877      14400      17000             0          17500

  Area Harvested 12600        14368      13000      14900             0          15100

  Bearing Trees  2369         2701       2444       2801              0          2838

  Non-Bearing    394          284        320        394               0          451
  Trees                                                                          

  TOTAL No. Of   2763         2985       2764       3195              0          3289
  Trees                                                                          

  Production     250          297        270        310               0          312

  Imports        8            8          9          11                0          8

  TOTAL SUPPLY   258          305        279        321               0          320

  Exports        2            5          4          4                 0          5

  Fresh Dom.     221          265        238        283               0          280
  Consumption                                                                    

  Processing     35           35         37         34                0          35

  TOTAL          258          305        279        321               0          320
  DISTRIBUTION                                                                   
  -------------- ------------ ---------- ---------- ----------------- ---------- ----------

## Fresh Concentrate Orange Juice

  -------------- ---------- ---------- ---------- ---------- ---------- ----------
  PSD Table                                                             

  Country        Mexico                           65 Degrees            
                                                  Brix                  

  Commodity      Juice,                           (MT)                  
                 Orange                                                 

                 2001                  2002                  2003       
                 Revised               Estimate              Forecast   

                 USDA       Post       USDA       Post       USDA       Post
                 Official   Estimate   Official   Estimate   Official   Estimate
                 \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year    01/2002               01/2003               01/2004    
  Begin                                                                 

  Deliv. To      500        340        150        130        0          200
  Processors                                                            

  Beginning      3000       3000       3000       3000       0          3000
  Stocks                                                                

  Production     50000      34000      15000      13000      0          20000

  Imports        1000       710        1500       900        0          900

  TOTAL SUPPLY   54000      37710      19500      16900      0          23900

  Exports        47000      30710      13150      9900       0          16900

  Domestic       4000       4000       3350       4000       0          4000
  Consumption                                                           

  Ending Stocks  3000       3000       3000       3000       0          3000

  TOTAL          54000      37710      19500      16900      0          23900
  DISTRIBUTION                                                          
  -------------- ---------- ---------- ---------- ---------- ---------- ----------

## Key Lime Wholesale Prices

+------------------+-----------------+-----------------+---------------+
| **[Key Lime      |                 |                 |               |
| Wholesale Prices |                 |                 |               |
| (Pesos/Kg        |                 |                 |               |
| )]{.smallcaps}** |                 |                 |               |
+------------------+-----------------+-----------------+---------------+
| Month            | 2002            | 2003            | Change        |
|                  |                 |                 |               |
|                  |                 |                 | \%            |
+------------------+-----------------+-----------------+---------------+
| January          | 4.25            | 2.66            | (37.41)       |
+------------------+-----------------+-----------------+---------------+
| February         | 3.74            | 6.21            | 66.04         |
+------------------+-----------------+-----------------+---------------+
| March            | 2.21            | 8.39            | 279.64        |
+------------------+-----------------+-----------------+---------------+
| April            | 2.11            | 3.19            | 51.18         |
+------------------+-----------------+-----------------+---------------+
| May              | 2.02            | 1.65            | (18.32)       |
+------------------+-----------------+-----------------+---------------+
| June             | 2.08            | 1.75            | (15.87)       |
+------------------+-----------------+-----------------+---------------+
| July             | 2.66            | 1.90            | (28.57)       |
+------------------+-----------------+-----------------+---------------+
| August           | 3.04            | 2.10            | (30.92)       |
+------------------+-----------------+-----------------+---------------+
| September        | 2.83            | 2.30            | (18.73)       |
+------------------+-----------------+-----------------+---------------+
| October          | 2.33            | 2.20            | (5.58)        |
+------------------+-----------------+-----------------+---------------+
| November         | 2.14            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| December         | 2.09            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| **[SOURCE:       |                 |                 |               |
| Servicio         |                 |                 |               |
| Nacional de      |                 |                 |               |
| Informacion de   |                 |                 |               |
| Mercado          |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **[Avr. exchange |                 |                 |               |
| rate for 2002    |                 |                 |               |
| US\$1.00 = \$    |                 |                 |               |
| 9.82             |                 |                 |               |
| peso             |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **[exchange rate |                 |                 |               |
| Oct. 29, 2003    |                 |                 |               |
| US\$1.00 = \$    |                 |                 |               |
| 11.17            |                 |                 |               |
| peso             |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
+------------------+-----------------+-----------------+---------------+

## Persian Lime Wholesale Prices

+-----------------+----------------+----------------+-----------------+
| **[Persian Lime |                |                |                 |
| Wholesale       |                |                |                 |
| Prices          |                |                |                 |
| (Pesos/Kg)      |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
+-----------------+----------------+----------------+-----------------+
| Month           | 2002           | 2003           | Change          |
|                 |                |                |                 |
|                 |                |                | \%              |
+-----------------+----------------+----------------+-----------------+
| January         | 2.34           | 1.89           | (19.23)         |
+-----------------+----------------+----------------+-----------------+
| February        | 2.69           | 4.38           | 62.83           |
+-----------------+----------------+----------------+-----------------+
| March           | 4.99           | 6.79           | 36.07           |
+-----------------+----------------+----------------+-----------------+
| April           | 3.52           | 8.51           | 141.76          |
+-----------------+----------------+----------------+-----------------+
| May             | 3.45           | 9.70           | 181.16          |
+-----------------+----------------+----------------+-----------------+
| June            | 2.26           | 3.69           | 63.27           |
+-----------------+----------------+----------------+-----------------+
| July            | 1.39           | 1.67           | 20.14           |
+-----------------+----------------+----------------+-----------------+
| August          | 1.33           | 1.69           | 27.07           |
+-----------------+----------------+----------------+-----------------+
| September       | 1.53           | 2.02           | 32.03           |
+-----------------+----------------+----------------+-----------------+
| October         | 1.37           | 1.87           | 36.50           |
+-----------------+----------------+----------------+-----------------+
| November        | 1.51           | N/A            | N/A             |
+-----------------+----------------+----------------+-----------------+
| December        | 1.48           | N/A            | N/A             |
+-----------------+----------------+----------------+-----------------+
| **[SOURCE:      |                |                |                 |
| Servicio        |                |                |                 |
| Nacional de     |                |                |                 |
| Informacion de  |                |                |                 |
| Mercados        |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
|                 |                |                |                 |
| **[Avr.         |                |                |                 |
| exchange rate   |                |                |                 |
| for 2002        |                |                |                 |
| US\$1.00 = \$   |                |                |                 |
| 9.82            |                |                |                 |
| pesos           |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
|                 |                |                |                 |
| **[exchange     |                |                |                 |
| rate Oct. 29,   |                |                |                 |
| 2003 US\$1.00 = |                |                |                 |
| \$ 11.17        |                |                |                 |
| pesos           |                |                |                 |
| ]{.smallcaps}** |                |                |                 |
+-----------------+----------------+----------------+-----------------+

## Wholesale Orange Prices

+------------------+-----------------+-----------------+---------------+
| **[Wholesale     |                 |                 |               |
| Orange Prices    |                 |                 |               |
| (Pesos/Kg        |                 |                 |               |
| )]{.smallcaps}** |                 |                 |               |
+------------------+-----------------+-----------------+---------------+
| Month            | 2002            | 2003            | Change        |
|                  |                 |                 |               |
|                  |                 |                 | \%            |
+------------------+-----------------+-----------------+---------------+
| January          | 1.12            | 1.62            | 44.64         |
+------------------+-----------------+-----------------+---------------+
| February         | 1.14            | 1.74            | 52.63         |
+------------------+-----------------+-----------------+---------------+
| March            | 1.19            | 2.23            | 87.39         |
+------------------+-----------------+-----------------+---------------+
| April            | 1.54            | 2.61            | 69.48         |
+------------------+-----------------+-----------------+---------------+
| May              | 2.47            | 3.05            | 23.48         |
+------------------+-----------------+-----------------+---------------+
| June             | 3.30            | 4.64            | 40.61         |
+------------------+-----------------+-----------------+---------------+
| July             | 4.01            | 4.46            | 11.22         |
+------------------+-----------------+-----------------+---------------+
| August           | 4.05            | 3.78            | (6.67)        |
+------------------+-----------------+-----------------+---------------+
| September        | 3.54            | 3.01            | (14.97)       |
+------------------+-----------------+-----------------+---------------+
| October          | 1.69            | 2.90            | 71.60         |
+------------------+-----------------+-----------------+---------------+
| November         | 1.71            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| December         | 1.62            | N/A             | N/A           |
+------------------+-----------------+-----------------+---------------+
| **[SOURCE:       |                 |                 |               |
| Servicio         |                 |                 |               |
| Nacional de      |                 |                 |               |
| Informacion de   |                 |                 |               |
| Mercado          |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **[Avr. exchange |                 |                 |               |
| rate for 2002    |                 |                 |               |
| US\$1.00 = \$    |                 |                 |               |
| 9.82             |                 |                 |               |
| peso             |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
|                  |                 |                 |               |
| **[exchange rate |                 |                 |               |
| Oct. 29, 2003    |                 |                 |               |
| US\$1.00 = \$    |                 |                 |               |
| 11.17            |                 |                 |               |
| peso             |                 |                 |               |
| s]{.smallcaps}** |                 |                 |               |
+------------------+-----------------+-----------------+---------------+

## Grapefruit Wholesale Prices

+--------------+--------+--------+--------+---+--------+--------+---+--------+
| *            |        |        |        |   |        |        |   |        |
| *[Grapefruit |        |        |        |   |        |        |   |        |
| Wholesale    |        |        |        |   |        |        |   |        |
| Prices]{.    |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| **[By Main   |        |        |        |   |        |        |   |        |
| Producer     |        |        |        |   |        |        |   |        |
| States]{.    |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [Month]      | [Mich  |        | [Tamau |   |        | [Ver   |   |        |
| {.smallcaps} | oacan] |        | lipas] |   |        | acruz] |   |        |
|              | {.smal |        | {.smal |   |        | {.smal |   |        |
|              | lcaps} |        | lcaps} |   |        | lcaps} |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
|              | 2002   | 2003   | 2002   |   | 2003   | 2002   |   | > 2003 |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [January]    |        |        |        |   |        | 1.66   | 1 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 6 |        |
|              |        |        |        |   |        |        | 8 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [February]   |        |        |        |   |        | 1.64   | 2 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 6 |        |
|              |        |        |        |   |        |        | 9 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [March]      |        |        |        |   |        |        | 3 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 5 |        |
|              |        |        |        |   |        |        | 3 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [April]      |        |        |        |   |        | 3.07   | 3 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 0 |        |
|              |        |        |        |   |        |        | 3 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [May]        | 3.39   |        |        |   |        | 3.14   | 2 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 3 |        |
|              |        |        |        |   |        |        | 8 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [June]       | 3.50   | 3.57   | 3.80   | 3 |        |        | 3 |        |
| {.smallcaps} |        |        |        | . |        |        | . |        |
|              |        |        |        | 4 |        |        | 4 |        |
|              |        |        |        | 6 |        |        | 6 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [July]       | 3.82   | 3.54   |        |   |        |        | 3 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 7 |        |
|              |        |        |        |   |        |        | 5 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [August]     | 3.09   | 3.50   |        |   |        |        | 3 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 8 |        |
|              |        |        |        |   |        |        | 6 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [September]  | 2.44   | 3.50   |        |   |        | 2.76   | 2 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 9 |        |
|              |        |        |        |   |        |        | 3 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [October]    |        |        |        |   |        | 2.41   | 2 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 2 |        |
|              |        |        |        |   |        |        | 7 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [November]   |        |        |        |   |        | 2.26   |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [December]   |        |        |        |   |        |        |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| **[SOURCE:   |        |        |        |   |        |        |   |        |
| Servicio     |        |        |        |   |        |        |   |        |
| Nacional de  |        |        |        |   |        |        |   |        |
| Informacion  |        |        |        |   |        |        |   |        |
| de           |        |        |        |   |        |        |   |        |
| Mercados]{.  |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| **[Avr.      |        |        |        |   |        |        |   |        |
| exchange     |        |        |        |   |        |        |   |        |
| rate for     |        |        |        |   |        |        |   |        |
| 2002         |        |        |        |   |        |        |   |        |
| US\$1.00 =   |        |        |        |   |        |        |   |        |
| \$ 9.82      |        |        |        |   |        |        |   |        |
| pesos]{.     |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| **[exchange  |        |        |        |   |        |        |   |        |
| rate Oct.    |        |        |        |   |        |        |   |        |
| 29, 2003     |        |        |        |   |        |        |   |        |
| US\$1.00 =   |        |        |        |   |        |        |   |        |
| \$ 11.17     |        |        |        |   |        |        |   |        |
| pesos]{.     |        |        |        |   |        |        |   |        |
| smallcaps}** |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+

Note: shaded area represents that domestic grapefruit prices were not
available.

## Monthly Exchange Rate Averages

+---------------------+-----------+---+-----------+---+-----------+---+
| **MONTHLY EXCHANGE  |           |   |           |   |           |   |
| RATE AVERAGES**     |           |   |           |   |           |   |
+=====================+===========+===+===========+===+===========+===+
|                     | **2001**  |   | **2002**  |   | **2003**  |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| ####### January     | 9.76      |   | 9.16      |   | 10.59     |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **February**        | 9.70      |   | 9.10      |   | 10.93     |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **March**           | 9.60      |   | 9.07      |   | 10.92     |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **April**           | 9.33      |   | 9.14      |   | 10.61     |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **May**             | 9.14      |   | 9.49      |   | 10.25     |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **June**            | 9.09      |   | 9.75      |   | 10.49     |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **July**            | 9.15      |   | 9.79      |   | 10.44     |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **August**          | 9.12      |   | 9.83      |   | 10.75     |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **September**       | 9.40      |   | 10.05     |   | 10.92     |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **October**         | 9.45      |   | 10.09     |   | 11.17     | \ |
|                     |           |   |           |   |           | * |
+---------------------+-----------+---+-----------+---+-----------+---+
| **November**        | 9.25      |   | 10.19     |   | N/A       |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **December**        | 9.16      |   | 10.21     |   | N/A       |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| **Annual Avg.**     | **9.35**  |   | **9.82**  |   | N/A       |   |
+---------------------+-----------+---+-----------+---+-----------+---+
| ###                 |           |   |           |   |           |   |
| ##### Source: Mexic |           |   |           |   |           |   |
| an Federal Register |           |   |           |   |           |   |
|                     |           |   |           |   |           |   |
| **Note: Monthly     |           |   |           |   |           |   |
| rates are averages  |           |   |           |   |           |   |
| of daily exchange   |           |   |           |   |           |   |
| rates from the      |           |   |           |   |           |   |
| Banco de Mexico.**  |           |   |           |   |           |   |
|                     |           |   |           |   |           |   |
| **\* As of October  |           |   |           |   |           |   |
| 29, 2003**          |           |   |           |   |           |   |
+---------------------+-----------+---+-----------+---+-----------+---+

# Section III. Narrative on Supply & Demand, Policy & Marketing

## FRESH ORANGES

## PRODUCTION

Although there is not an official forecast for MY 2003/04
(November-October) fresh orange production, sources believe production
will increase to 3.4 MMT, a 13-percent increase from MY 2002/03
production, due to good weather conditions. Area planted for oranges is
forecast at 350,000 hectares for MY 2003/04, a very slight decrease
compared to MY 2002/03 area planted, due to more abandoned groves. In
fact, grapefruit producers indicate that area planted is decreasing
because they are switching to other crops due to high production costs,
wide swings in fresh orange prices, and marketing problems.

The orange production estimate for MY 2002/03 has been revised downward
to 3.0 MMT, based on official estimates and some private sources.
However, other private sources estimate production at an even lower
level. Dry weather conditions that prevailed along the Gulf of Mexico
affected overall citrus production for MY 2002/03, with the most
affected product being oranges. Orange trees had fewer first and second
blooms, resulting in lower volumes of oranges. As a result, prices for
oranges were high from December 2002 to the end of August 2003. Area
planted for MY 2002/03 was revised upward and area harvested was revised
downward based on official data. However, some producers disagree with
official estimates of area planted, maintaining that there has been no
expansion of groves. Production, area planted and harvested for MY
2001/02 has been updated to reflect recent official data.

Countrywide orange yields for MY 2003/04 are forecast to increase to
10.6 MT/ha, due to better weather conditions. Countrywide orange yields
for MY 2002/03 are expected at 9.97 MT/ha, lower than MY 2001/02 yields,
due to drier weather conditions. Orange yields differ widely depending
on the production area. Usually, Veracruz yields range from 10 to 20
MT/ha. In Nuevo Leon, yields range from 12 to 15 MT/ha. In San Luis
Potosi, yields range from 7 to 13 MT/ha. This variance in yields is
caused by many factors such as weather, input levels, tree density and
terrain.

The MY 2003/04 forecast for oranges destined for processing is
approximately 200,000 MT, an increase compared to MY 2002/03, due to
expected larger supplies of oranges. However, the industry indicates
that international prices for frozen concentrate orange juice (FCOJ)
have been low, thus limiting production in Mexico. The estimate for
oranges destined for processing for MY 2001/02 and 2002/03 was revised
downward, based on industry information.

Costs of production have increased for all citrus fruit, especially for
imported inputs, such as fertilizers, pesticides, and other agrochemical
products which have increased more than the rate of inflation.
Production costs vary among the citrus regions and between producers.
The average cost of production in some areas in Veracruz for a
traditional grove with little intensive cultivation is approximately
4,500 pesos/Ha (US\$398/Ha), while the average cost for a more
intensively-farmed grove is about 8,500 pesos/Ha (US\$752) or higher.
The cost of production is higher in Nuevo Leon than in Veracruz because
of irrigation costs. Costs in Nuevo Leon range from 11,500 to 12,500
pesos/Ha (US\$1,017.70 to \$1,106.20/Ha). Fertilization and pest control
accounts for much of the difference between these two different
averages. These costs represent approximately 40 percent of total
production costs. Average field worker wages are about 60 pesos
(US\$5.30) per day, but sometimes producers have to pay 80 pesos
(US\$7.08) per day or more to attract enough workers. To harvest
oranges,

workers in some areas are being paid more \-- about \$200 pesos/MT
(US\$17.70/MT), due to competition for workers from the *maquiladoras*
and immigration to the United States.

Grower prices at the farm gate for MY 2003/04 began in October at
\$600-700 pesos/MT (US\$53.09 - \$61.95/MT) for the early varieties.
However, since production is forecast to be higher, prices are not
expected to increase as much. Transportation costs from Veracruz to
Mexico City are usually 2,500 to 3,000 pesos per 10 MT (US\$221.23 to
\$265.50 per 10 MT) for one-day delivery.

There are specific regulations on citrus for virus-free citrus
propagative material (NOM-079-FITO-2002) that establish the
phytosanitary requirements to produce and transport virus-free citrus
propagative material and other viruses associated with citrus. These
regulations apply to propagative material, production areas,
transportation, and commercial growers. Imported propagative material
must originate from certified institutions and comply with SAGARPA's
requirements. According to citrus growers, SAGARPA authorities are
already monitoring most of the propagative material that is imported
into Mexico.

There is a national program for citrus reconversion wherein the
government is promoting the planting of CTV-resistant root stock.
However, this replanting has been slow as it is very costly. Growers
have not yet organized to protect their groves and efforts are being
done more on an individual basis, with some producers planting
CTV-resistant root stock.

## CONSUMPTION

The fresh orange consumption forecast for MY 2003/04 is 3.2 MMT, an
11-percent increase, due to larger supplies at available prices. Final
consumption estimates, however, will depend on the final volume
purchased by the processing industry. The fresh orange consumption
estimate for MY 2002/03 has been revised downward to 2.8 MMT, due to
smaller supplies available. The MY 2001/02 consumption estimate was
revised upward, based on available information.

Orange prices for MY 2003/04 are expected to be lower due to larger
supplies. During the first two weeks of October 2003, wholesale prices
of new crop Valencia oranges from Veracruz averaged \$2.67 pesos/kg
(US\$0.24/kg), compared to the almost \$4.00 pesos/kg (US\$0.35/kg) that
prevailed in July/August 2003. Most of the oranges in the fresh market
are destined for domestic fresh squeezed juice.

## TRADE

Mexican orange exports for MY 2003/04 are forecast to increase to 10,000
MT, due to higher domestic supplies; however, international demand is
expected to be lower due to larger orange supplies in the U.S. Most of
the oranges exported to the U.S. are from Sonora, which produces very
good, high quality oranges. Mexico will continue to export processed
oranges as peeled slices for fruit salads and other foods. The estimate
for orange exports for MY 2002/03 was revised downward, due to lower
available supplies. MY 2001/02 export estimate remains unchanged.

Mexican orange imports for MY 2003/04 are forecast to be at the same
level as in MY 2002/03. Imports are usually small, due to available
domestic orange supplies at affordable prices. MY 2001/02 and 2002/03
remain unchanged. U.S. orange exports to Mexico could expand
significantly given the zero import tariff in Mexico and the ability of
California, Texas and Arizona to ship to Mexico. U.S. orange prices,
however, are higher than Mexican domestic produce.

## MARKETING

U.S. citrus fruit exporters should be aware of the fact that the Mexican
market is more price sensitive than quality sensitive. This is one of
the main reasons for limited exports of U.S. citrus products. Despite
the excellent quality, prices are four to five times higher than Mexican
products. Some attempts have been made by U.S. firms to enter the
market, but they have had limited success because of strategies
emphasizing quality rather than price. Another limitation for U.S.
citrus exports to Mexico are the phytosanitary restrictions. Only citrus
fruits coming from the states of California, Texas and Arizona are
authorized by the Mexican government to enter the country and must be
accompanied by an International Phytosanitary Certificate indicating
that the products were grown in fruit fly-free areas.

# FRESH CITRUS, OTHER

## PRODUCTION

This section covers two citrus fruits that are of economic significance
to Mexico: Key Limes and Persian Limes. Mexican Key Limes are grown
mainly on the Pacific coast, in the states of Colima, Michoacan,
Guerrero and Oaxaca. Most Persian Limes are grown in a micro‑climate
called \"*La Huasteca*\" that includes portions of the states of
Veracruz, San Luis Potosi, Tamaulipas, and Hidalgo. Oaxaca, Yucatan, and
Tabasco, states in the southern part of Mexico, also produce Persian
Limes.

Total production of both limes for MY 2003/04 is forecast at 1.8 MMT, 6
percent higher than MY 2002/03 production, due to more acreage coming
into production. According to producers, weather conditions in general
have been good. Production for MY 2002/03 was revised upward based on
official estimates. Despite the fact that weather conditions in Veracruz
were drier than normal, Persian Limes production was not as affected as
fresh orange production. Other producing areas also had good weather
conditions. Production for MY 2001/02 was also revised upward based on
official estimates.

Area planted to both Persian and Key Limes has increased in Mexico, due
to the fact that limes command good prices on the international market,
there is relatively no competition from other countries, and they
generate few phytosanitary concerns. Because of this, Persian Lime
planted area in Veracruz has grown at a faster rate, with some producers
replanting orange and grapefruit groves with Persian Limes in order to
take advantage of the good international demand and higher prices.
Domestic demand for Key Limes has also increased. As a result, new trees
are coming into production in the states of Veracruz, Michoacan and
Oaxaca. Approximately 30 percent of total area planted is Persian Limes
and 68 percent is Key Limes. Due to the excellent winter window
(December -- February) enjoyed by the state of Michoacan, which allows
its Key Limes to hit the domestic market first, planted area is slowly
expanding in this state. According to producers, however, the domestic
market is almost saturated with Key Limes and therefore a sharp increase
in Michoacan's area planted would only result in lower producer profits.

Total area planted for MY 2003/04 is forecast at 142,000 hectares. Area
planted for MY 2002/03 was revised upward and area harvested was revised
downward based on official estimates. Area planted and harvested for MY
2001/02 was updated based on official final estimates. Nearly 20 percent
of the Persian Lime groves in Veracruz use micro-jet irrigation or other
irrigation systems and produce all year round. Most of the irrigated Key
Lime groves are in the states of Michoacan and Colima and are able to
produce all year round. In contrast, almost all the planted area for Key
Lime in Guerrero and Oaxaca is non‑irrigated.

In Colima, in over half of the Key Lime groves, coconut palm trees are
planted in between Key Lime trees in order to increase producer revenue.

The Persian Lime trade tends to be dominated by large producers since
production costs for Persian Limes in Veracruz, produced mainly for
export, is higher than those for oranges. According to sources, Persian
Lime production costs average from 8,000 pesos/Ha to 9,500 pesos/Ha
(US\$707.95 to \$840.70/Ha) or more, due to higher prices for imported
inputs such as fertilizers, pesticides and other agrochemical products.
However, the devaluation of the peso against the dollar has been of
benefit to exporters. Well-tended areas can have production costs of
\$14,000 pesos/Ha (US\$1,239/Ha). Transportation costs from Veracruz to
Mexico City are usually 3,500 to 4,000 pesos/truck (US\$309.73 to
\$354.00 / truck), and delivery time averages about 8 hours. The cost of
production for Key Limes varies according to the cultural practices and
technology used. In the most important Key Lime producing states
(Oaxaca, Colima and Michoacan), production costs can vary from 7,000
pesos/Ha to 16,000 pesos/Ha (US\$619.45 to \$1,416./Ha) for the
well-tended areas.

Persian and Key Lime yields differ widely depending on production
conditions. The yields for Persian Limes in Veracruz mostly range from 8
to 16 MT/Ha, depending on cultural practices, but some yields are as
high as 25 MT/Ha. Key Lime yields average between 7 to 12 MT/Ha, with a
few well-tended groves reaching 30 MT/Ha. For Key Limes in Colima that
are interplanted with coconut palm, yields are generally 50 percent less
than in conventional groves.

Grower prices for Persian Limes range from 400 to 800 pesos/MT
(US\$35.40 to \$70.80/MT) for the domestic market, and 600 to 3,000
pesos/MT (US\$53.00 to \$265.00/MT) for the export market during January
to April. Grower prices for Key Limes fluctuate more than do those for
Persian Limes, depending on the season and the producing state. On
average, Key Lime grower prices from Michoacan range from 650 to 2,600
pesos /MT (US\$57.52 to \$230.10/MT). Michoacan production is geared
toward the winter season (October/February), while production from
Colima, Oaxaca and other states cover the rest of the year. There is,
however, year-round production for both Key and Persian Limes.

## CONSUMPTION

Domestic consumption of both Key and Persian Limes in Mexico depends
largely on price. Total lime consumption for MY 2003/04 is forecast at
1.19 MMT. Consumption for MY 2002/03 was revised downward due to higher
prices. While prices for both limes began at higher levels compared to
those of MY 2001/02, prices for Persian Limes were unusually high during
the first quarter due to more export demand. Consumption for MY 2001/02
was revised upward based on more available data. Persian Limes that do
not meet the higher quality requirements demanded of the export market,
will be consumed domestically.

Most of the Key Limes go to the fresh domestic market, although exports
have been increasing recently. In general, approximately 18 to 23
percent of total Key Lime production goes to processing. Producers from
Colima and Michoacan indicate that approximately 35 to 40 percent of
their limes go to processors. Official information on the processing
industry, however, is unavailable. About 60 to 70 percent of Persian
Limes from Veracruz go to the export market and the rest go to the fresh
market and processing plants. This balance, however, depends on U.S.
demand.

Mexican Key Limes and Persian Limes compete for the same market. When
Key Limes and Persian Limes are both present in the domestic market,
prices are relatively low. At the onset of the Persian Lime harvest
season (August or September), prices for both drop. After a month or
two, however, when Persian Lime growers begin to export, prices for
Persian Limes increase and remain high until April or May when exports
of Persian Limes stop and both crops are again competing for the fresh
domestic market. Key Limes from Michoacan, Colima and Oaxaca are sold on
the wholesale market in 18-20/kg boxes; those from Guerrero are sold in
20-22/kg bags. Persian Limes are sold in the wholesale market in
50-100/kg bags.

## TRADE

Persian and Key Lime exports for MY 2003/04 are forecast at 335,000 MT,
a slight increase from the preceding year estimates, due to continued
good international demand. International prices for Persian Limes for MY
2002/03 were about US\$10 to \$30 per 40-pound box. Growers are
expecting prices to rise to US\$12 to \$15 per box for December and
January 2004. Persian Limes reach, on average, US\$20 to \$30 per
40-pound box when international prices are good. Exporters indicate that
Brazil is competing with Mexico for the European market. Export
estimates for MY 2002/03 were revised upward, due to greater
international demand. Exports for 2001/02 were revised downward based on
trade data. According to producers, Persian Limes from Mexico supply
about 40 percent of the U.S. and Canadian markets. However, lime
producers are expanding into new markets in Japan and Europe. Lime
imports continue to be low due to ample domestic supplies at available
prices. MY 2003/04 imports are forecast at 1,000 MT. Data for MY 2001/02
and 2002/03 remain unchanged.

Mexico\'s tariff rate on imported limes from the United States is zero
under NAFTA. The U.S. tariff rate for Persian Limes is zero. The U.S.
tariff phase‑out for Key Limes is not expected to substantially increase
lime exports to the United States in the short term. Mexican exports
depend on U.S. demand and price.

# FRESH GRAPEFRUIT 

## PRODUCTION

Although there is no official forecast for grapefruit production for MY
2003/04, producers believe grapefruit production could reach 312,000 MT.
Weather has been relatively good in most areas, especially in Michoacan,
where area planted continues to grow. Production estimates for MY
2002/03 were revised upward to 310,000 MT, due to good weather.
Producers indicate that some well-tended groves in Veracruz increased
yields. In the state of Michoacan the groves are still relatively new,
and, having entered the sixth or seventh year of production, are now
just reaching their maximum-bearing potential. However, growers
indicated that dry weather conditions had affected grapefruit production
in some areas of Nuevo Leon, Tamaulipas and Veracruz. Like Persian and
KeyLimes production, grapefruit production was not as affected as was
orange production by these dry conditions. Grapefruit production
estimates for MY 2001/02 were revised upward based on official data.

Area planted for MY 2003/04 is forecast at 17,500 hectares. Area has
been increasing mainly in the state of Michoacan where area planted has
grown 30 percent since 2001. Although the state of Veracruz, the state
with the largest grapefruit production, increased area planted, this has
been offset by abandoned areas in other parts of the state. Costs of
production, such as imported agrochemicals and fertilizers, have
increased due to the devaluation of the peso against the dollar. Area
planted and harvested for MY 2001/02 and 2002/03 was revised upward
based on official estimates. Most of the new planted areas are geared
towards the European export market.

There are two types of grapefruit planted in Mexico: the red table
varieties produced in Tabasco, Campeche, Michoacan, Nuevo Leon and
Veracruz, which are for export to the United States and Europe as fresh
fruit; and the white fleshed varieties produced in Tamaulipas and
Veracruz for juice production or for peeled slices. According to
growers, planting of red varieties is increasing because of increased
export demand.

According to growers, the MY 2003/04 forecast for grapefruit destined
for processing will be approximately 35,000 MT. However, this
information is difficult to find since it is not published by official
sources and companies treat it as confidential information. Grapefruit
is used for peeled slices or juice production. Grapefruit for processing
purposes for MY 2002/03 was revised downward as there was less fruit
available for the industry. Grapefruit for processing for MY 2001/02
remained unchanged.

Overall average yields for MY 2003/04 are forecast at 21 MT/Ha. Average
yields for MY 2002/03 are estimated at 20.8 MT/Ha because of the dry
weather conditions that affected some producing states. An overall
normal yield for grapefruit is approximately 23 MT/Ha. Veracruz accounts
for about 58 percent of Mexican grapefruit production and has the
highest yield in the country with 20 to 28 MT/Ha. Michoacan follows with
11 percent of production and yields between 11 to 15 MT/Ha. Nuevo Leon
accounts for almost 9 percent of total production of grapefruit with
yields of 18 to 21 MT/Ha. In other states, yields vary from 10 to 15
MT/Ha. Grower prices for MY 2003/04 in Veracruz for October 2003 are
approximately \$1,000 to \$1,300 pesos/MT (US\$88.50 to \$115.04/MT) for
the red varieties, but prices tend to drop by November. Average grower
prices for Nuevo Leon began at 1,000 pesos/MT (US\$88.50/MT). Since
Michoacan has developed areas with red varieties that can be harvested
in June/July, grower prices tend to be higher. []{.mark}

## CONSUMPTION

Grapefruit consumption for MY 2003/04 is forecast at 280,000 MT.
Although demand for grapefruit has increased in the past years, due to
the preference of consumers for low calorie foods, some producers
believe that domestic demand will be lower this year, due to a sluggish
economy. Consumption estimates for MY 2001/02 and 2002/03 were revised
upward based on available information. Prices for MY 2002/03 were higher
compared to the previous year due to a higher demand. Wholesale prices
for October 2003 in Mexico City began at approximately \$2.30/kg
(US\$0.20/kg) for the Veracruz crop, which is lower than last year's
October price of \$2.40 pesos/kg (US\$0.23/kg). Growers indicate that
there is no premium on quality, as consumers are more interested in
lower prices. This trend also affects grapefruit consumption versus
other more accessible fruits like oranges. Since Michoacan can harvest
earlier than Veracruz, Michoacan producers can often command higher
prices in the domestic market. Michoacan wholesale prices for
July/September were approximately \$3.50/Kg (US\$0.31/kg).

## TRADE

Grapefruit exports for MY 2003/04 are forecast to reach 5,000 MT.
According to growers, demand from the European market has been growing
steadily. Although grapefruit exports are geared to the European and
Japanese markets, exports are still small. Exports for MY 2002/03
remained unchanged. Export estimates for MY 2001/02 were revised upward
based on trade data. However, any substantial increase in grapefruit
exports, will depend on advances in the phytosanitary area and
technological practices. According to producers, Nuevo Leon is preparing
the way to implement fruit irradiation facilities for exporting fruit.

MY 2003/04 imports are forecast at 8,000 MT. Data for MY 2002/03 imports
was revised upward, due to less domestic fruit available. Grapefuit
imports for 2001/02 remain unchanged. While likely to expand slightly
U.S. grapefruit exports to Mexico will still be relatively small.
According to sources, most of the imported grapefruit from the U.S. is
further processed for re-export to U.S. and European markets.

# FROZEN CONCENTRATE ORANGE JUICE

## PRODUCTION

Frozen concentrate orange juice (FCOJ) production for MY 2004
(January-December) is forecast at 20,000 MT, an increase compared to MY
2003 production because of expected higher fresh orange production and
lower fresh orange prices. Juice production depends heavily on the
international price of FCOJ. FCOJ future contracts for CY 2004 are about
US\$0.68/lb, which is a very low price. The FCOJ production estimate for
MY 2003 was revised downward, due to smaller orange supplies. FCOJ
future contracts for CY 2003 were about US\$0.71/lb to US\$0.87/lb.

The industry is expecting to buy fruit for 2004 at lower prices than it
did in MY 2003.

The industry bought fruit for MY 2003 at higher prices than it did in MY
2002. The industry bought fresh fruit on average from \$600 to \$1,000
pesos/MT (US\$55.55 to \$92.59/MT) during February/March 2003. Since the
fresh market received higher prices due to shorter supplies, the
processing industry had to pay higher prices, which meant smaller profit
margins for the industry. Most of the oranges in the fresh market are
destined for domestic fresh squeezed juice.

The general uncertainty of the FCOJ industry has not changed from
previous years. Unless FCOJ export prices are good, thereby enabling
processors to increase the price paid to fruit producers, it is unlikely
that juice concentrate production will increase dramatically. Due to
financial problems of the processing industry, there has been a
concentration in ownership. Of the 22 Mexican juice plants previously in
operation in, only 7 are currently running.

## CONSUMPTION

In general, the industry does not expect MY 2004 domestic consumption to
increase because of the availability of fresh oranges in the domestic
market. The majority of Mexican consumers prefer and demand fresh
squeezed juice instead of processed orange juice. Consumption estimates
for MY 2002 and 2003 remain unchanged. Most of the orange juice produced
in Mexico goes to the export market. According to processors, there is
usually about a 3,000 MT carryover of FCOJ from one year to the other.

## TRADE

Exports of FCOJ for MY 2004 are forecast to reach approximately 16,900
MT. Exports are expected to be higher because of an expected larger
availability of domestic oranges for processing at available prices.
However, according to industry sources, the U.S. quota might not be
filled again. Exports for MY 2003 were revised downward because of a
shorter availability of domestic oranges for processing. The United
States is the main market for Mexican FCOJ, with Japan and European
countries also becoming important markets for this product. Any FCOJ
export growth will be limited to the needs of Florida's industry to mix
its juice with the higher sugar-ratio and more deeply-colored Mexican
juice. Also, export increases will depend on promotion in other markets
besides the U.S. Exports for MY 2002 were revised downward based on
trade data.

FCOJ imports for MY 2004 are forecast to be similar to those of MY 2003
to cover industry needs. MY 2002 import data was revised downward
according to trade data. According to the industry, most imports are for
mixing purposes. With domestic consumption almost flat, greater FCOJ
imports are not likely for the time being.

Under NAFTA, Mexico has access to the U. S. market for 40 million
gallons of FCOJ (single strength equivalent) at one‑half of the Most
Favored Nation (MFN) tariff rate. Any FCOJ imports above the quota will
enter the United States at the MFN rate. This quota will be phased‑out
in 2008. Exporters of FCOJ need a certificate issued by the Mexican
government to be able to export to the U.S. under the NAFTA provisions.
The Mexican government allocates the quota amongst most of the producing
companies to give them an equal opportunity to share the benefits of
NAFTA. When a company cannot cover the designated quota, the Mexican
government reallocates the uncovered share to other companies.

A free trade agreement was signed between Mexico and the European Union
(EU) on July 1, 2000. Among the agricultural products negotiated in the
agreement were fresh orange juice and FCOJ. The EU allows 1,000 MT of
fresh orange juice under a quota access to the EU market with a 50
percent tariff under the MFN duty. Also, the EU allows 30,000 MT of FCOJ
under a quota with a tariff of 25 percent under the MFN duty. Mexico has
begun to increase exports of FCOJ to Germany, the United Kingdom and
Japan.