Voluntary Report - public distribution

**Date:** 3/31/2005

**GAIN Report Number:** MX5028

MX5000

**Mexico**

**Agricultural Situation**

**Weekly Highlights and Hot Bites, Issue #11**

**2005**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

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

**Report Highlights:**

-   POVERTY AND WEAK AGRICULTURE ARE REASONS TO RENEGOTIATE NAFTA

-   MEXICAN HORTICULTURAL PRODUCTS: A GREAT SUCCESS IN THE UNITED STATES

-   USABIAGA: AGRICULTURAL SECTOR -- ONE OF THE MOST DYNAMIC

-   SAGARPA IMPOSES RESTRICTIONS TO CONTROL AI OUTBREAK

-   UNITED STATES FURTHER OPENS BORDER TO MEXICAN PORK

-   WAL-MEX TO OPEN ONE PRICE DEPARTMENTS

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Mexico \[MX1\]

\[MX\]

**POVERTY AND WEAK AGRICULTURE ARE REASONS TO RENEGOTIATE NAFTA**\
\
Representatives from the Free Trade Mexican Action Network (RMALC) said
that prior to the initiation of activities for larger regional
integration, Canada, Mexico and the United States must revise the NAFTA
model because poverty prevails in Mexico despite all efforts to increase
employment. Also, Mexico must push the U.S. and Canada to renegotiate
NAFTA's agricultural chapter because, according to RMALC, "NAFTA's most
dramatic impact" centers on this issue. Non-governmental organizations
pointed out that NAFTA trade benefits should be reconsidered since the
agreement did not generate more economic growth in Mexico, the trade was
concentrated on the assembly plants and neither generated the promised
jobs opportunities. RMALC highlighted that oilseeds imports increased
from 8.8 million metric tons in 1993 to 20.3 million metric tons in
2002. Moreover, the prices of basic products for the final consumer
increased 257 percent during the 1994-2000 period, while the prices paid
to producers in the same period increased 185 percent. RMALC
representatives added that the three governments must develop, in the
short term, large-scale objectives to fight environmental problems,
establish a common strategy on public health, and renegotiate the NAFTA
agricultural chapter, allowing Mexico to protect its strategic sectors
by excluding corn from the negotiations. (Source: *El Financiero*,
03/23/2005)\
\
**MEXICAN HORTICULTURAL PRODUCTS: A GREAT SUCCESS IN THE UNITED
STATES**\
\
The presence of Mexican fruits and vegetables in the U.S. and Canadian
markets can be considered a "success story" for producers and exporters.
Carlos Montibeller Zapien, president of the Corporation for Resolving
Fruit and Horticultural Product Controversies (DRC Mexico), said that
"ten domestic products increased their exports 120 percent during 2004".
DRC Mexico performs like a negotiating entity in resolving trade
problems between Mexican exporters and foreign buyers. Montibeller said
that, currently, Mexico supplies 59 percent of the U.S. horticultural
market, whose imports are valued at US\$ 4 billion per year, while
Mexico is the main supplier for the U.S. fruit market, covering 21
percent of the supply. Lentils, dry beans, dry peas, fresh lettuce,
grapefruit, frozen raspberries, oranges, pineapples and watermelon are
just a few of the horticultural products and fruits that increased in
exports during 2004. "Mexico is keeping a high share in the U.S. and
Canadian markets regarding fruits and vegetables indeed," Montibeller
concluded. (Source: *El Universal*, 03/25/2005)

# USABIAGA: AGRICULTURAL SECTOR -- ONE OF THE MOST DYNAMIC

During the inaugural ceremony of "AgroBaja 2004" in Mexicali, B.C., the
Secretary of Agriculture (SAGARPA), Javier Usabiaga Arroyo, stated that
the agricultural sector has maintained its dynamism in foreign export
sales with a 14.1 percent increase over the previous year. He
acknowledged that good opportunities exist in the market for
non-traditional agricultural products and that the Hispanic population
in the United States, numbering 39 million, is opening doors for new
production and sales alternatives. The "Mercado de la Nostalgia", so
designated by Hispanic consumers in the United States, is expanding and
demand for products like exotic fruits, nuts, vegetables, spices,
beverages, medicinal plants, and aromatic herbs is growing. Usabiaga
commented that the non-traditional agricultural producers are examples
of the new vision of the food and agricultural industry in Mexico.
(Source: *El Mañana*, 3/28/2005)

###### SAGARPA IMPOSES RESTRICTIONS TO CONTROL AI OUTBREAK

Mexico was forced to slaughter poultry this month from a farm in the
north of the country due to an outbreak of low path avian influenza
(AI). It is expected that an additional two million birds will be
sacrificed in the northern districts due to the outbreak. In addition,
SAGARPA also quarantined one million chickens following the AI detection
to ensure that the outbreak did not spread further. The illness was
identified as part of Mexico's permanent AI monitoring program and
SAGARPA emphasized that the control measures were put in place for
precautionary reasons. (Source: *Reforma*, 3/30/2005)

###### UNITED STATES FURTHER OPENS BORDER TO MEXICAN PORK

The U.S. Department of Agriculture (USDA) recognized the states of
Campeche, Quintana Roo, Yucatán, and Sonora as free of classical swine
fever (CSF), reopening the border to live hogs, pork, semen and pork
products from these states effective April 12. This increases the tally
to 8 Mexican states now identified as being free of CSF, with the
previous four being Sinaloa, Baja California, Baja California Sur, and
Chihuahua. According to Enrique Domínguez Lucero, Director of the
Mexican Pork Producers Council (Comepor), this decision is critical
because U.S. zoosanitary decisions are automatically recognized by a
majority of countries worldwide, which should allow Mexico to pursue
additional markets, starting with Canada and Chile. Domínguez added that
exports from these states to the United States would not resume until
the Mexican government successfully negotiated with its U.S.
counterparts on the elimination of the U.S. non-tariff trade barriers
currently in place for meat imports. These barriers are applied by U.S.
officials during zoosanitary inspections and can delay shipments by 3 to
5 days, adversely affecting Mexican exporters and often resulting in
spoiled meat due to extended exposure to high temperatures along the
border. Furthermore, Domínguez stated that while there are numerous
delays to Mexican shipments caused by U.S. inspections, Mexico possesses
the necessary facilities for zoosanitary inspections and U.S. imports
are cleared within two minutes. This, he added, explained the increase
in pork imports from the United States -- from 12,000 tons in 1992 (when
NAFTA was negotiated) to 500,000 today. (Source: *El Financiero*,
3/30/2005)

**WAL-MEX TO OPEN ONE PRICE DEPARTMENTS**\
\
Wal-Mex will open one-price departments in its Bodegas Aurrerá and
Wal-Mart Supercenter outlets. The one-price departments will emulate the
format of the Waldo\'s Mart stores in Mexico City, which offer all
products at a unit price equivalent to a dollar. Waldo\'s Mart has 124
stores in Mexico. Like the Waldo\'s Marts, the Bodegas Aurrerá stores
are in lower income areas, where the dollar-store concept seems to work
best. The Wal-Mart Supercenters, on the other hand, cater more towards
middle-income consumers looking for good deals. The one-price department
was announced in the Wal-Mex annual meeting, at which was also announced
a 13 percent growth in floor space for 2005. This year Wal-Mex plans to
open 24 Bodegas Aurrerá, nine Wal-Mart Supercenters, eight Sam\'s Clubs,
six Superama supermarkets and 20 restaurants. (Source: *El Financiero*,
3/29/2005)

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+----------+------------------------------------------------+----------+
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+----------+------------------------------------------------+----------+
| MX5025   | Weekly Highlights and Hot Bites, Issue #10     | 03/23/05 |
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| MX5026   | New Agricultural Center Created to Guide       | 03/28/05 |
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+----------+------------------------------------------------+----------+
| MX5027   | Sugar Annual Report                            | 03/30/05 |
+----------+------------------------------------------------+----------+