Required Report - public distribution

**Date:** 11/29/2004

**GAIN Report Number:** MX4133

MX4100

**Mexico**

**Avocado**

**Annual (Revised)**

**2004**

**Approved by:**

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

U.S. Embassy Mexico City

**Prepared by:**

Gabriel Hernandez

**Report Highlights:**

Mexican avocado production for MY 2004/05 is forecast at 1.03 million
metric tons (MMT), due to favorable weather conditions and good yields.
Mexican avocado exports are forecast to reach a record level of 135,000
MT in MY 2004/05, of which approximately 75,000 MT are forecast to be
exported to the United States, based on the expectation that year-round
market access is granted in most of the 50 U.S. states.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Unscheduled Report

Mexico \[MX1\]

\[MX\]

Table of Contents

[PS&D 3](#psd-1)

[PRODUCTION 3](#production)

[CROP AREA 3](#crop-area)

[INPUTS 4](#inputs)

[YIELDS 4](#yields)

[POLICY 5](#policy)

[CONSUMPTION 5](#consumption)

[AVOCADO PRICES 5](#avocado-prices)

[TRADE 5](#trade)

[TRADE MATRIX 7](#trade-matrix)

[TRADE POLICY 7](#section-5)

[MARKETING 7](#marketing)

# PS&D {#psd-1}

  ------------------- ------------- ------------- ------------------- -------------- ----------- --------------
  **PSD Table**                                                                                  

  **Country**         **Mexico**                                                                 

  **Commodity**       **Avocados,                 **(HECTARES)(1000                              
                      Fresh**                     TREES)(MT)**                                   

                      **2002**      **Revised**   **2003**            **Estimate**   **2004**    **Forecast**

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

  Market Year Begin   08/2002                     08/2003                            08/2004     

  Area Planted        99,367        99,367        102,478             102,519        0           102,533

  Area Harvested      93,793        93,793        99,000              95,482         0           102,476

  Bearing Trees       0             0             0                   0              0           0

  Non-Bearing Trees   0             0             0                   0              0           0

  TOTAL No. Of Trees  0             0             0                   0              0           0

  Production          897,231       897,231       1,040,393           902,332        0           1,030,000

  Imports             0             0             0                   0              0           0

  TOTAL SUPPLY        897,231       897,231       1,040,393           902,332        0           1,030,000

  Exports             94,243        76,000        120,000             105,000        0           135,000

  Fresh Dom.          767,988       786,231       885,393             772,332        0           860,000
  Consumption                                                                                    

  Processing          35,000        35,000        35,000              25,000         0           35,000
  Consumption                                                                                    

  TOTAL DISTRIBUTION  897,231       897,231       1,040,393           902,332        0           1,030,000
  ------------------- ------------- ------------- ------------------- -------------- ----------- --------------

# 

# PRODUCTION

Mexican avocado production for MY 2004/05 is forecast at 1.03 million
metric tons (MMT) due to favorable weather conditions, current
phytosanitary programs which have successfully controlled pests, and
more trees coming into production. Private sources indicate that these
conditions have helped to increase yields in what would have been the
down year of an alternate bearing cycle. Michoacan remains the main
producing state in Mexico, accounting for more than 88 percent of total
avocado production. Although favorable weather conditions prevailed in
MY 2003/04, production this season is estimated at 902,332 MT, 13.27
percent lower than the initial forecast, due to some producers' practice
of harvesting 1 MT per hectare in order not to saturate export markets
and cause export prices to fall. Avocados do not ripen until picked and
can stay on the tree for months, thereby allowing producers, working
together with exporters, to pick the most opportune harvesting moment.
MY 2002/03 figures were kept unchanged to reflect the most current
official data available.

# CROP AREA

MY 2004/05 total national area planted is forecast at 102,533 hectares,
a 1-percent increase over MY 2003/04 planted area, due to increased
international demand of high-quality Mexican Hass avocados. For the same
MY season, total area planted in the state of Michoacan is forecast at
87,359 ha, equivalent to 84 percent of the nation's total planted area.
In MY 2003/04, area planted was slightly increased due to the
integration of Tacambaro as a new municipality in the list of authorized
pest-free Michoacan municipalities (see MX4103). The MY 2003/04 estimate
for area harvested was revised downward as some of the younger trees had
not reached full bearing potential.

Currently, 27,390 hectares have been certified under the
APHIS--administered export inspection program, which allows Mexican
avocados to be shipped to selected U.S. states. Michoacan is the only
Mexican state allowed to export avocados to the United States and,
within Michoacan, the only municipalities which have been certified to
export by APHIS are Tancítaro, Uruapan, Salvador Escalante, Nuevo
Parangaricutiro, Peribán de Ramos, Ario de Rosales, Los Reyes,
Apatzingán and Taretan.

![](media/image2.wmf)

For 2006, the Michoacan State Health Committee expects the whole state
of Michoacan -- or 21 municipalities -- to be free of pests. This is the
first stage of a three-stage process that must be completed before a
municipality can export to the United States. Mexican government and
industry have agreed that the avocado sector should focus their efforts
on these three stages: first, on eradication of the pests of concern,
second, on recognition of pest free areas, and third, on accreditation
in the APHIS avocado export program.

## 

# INPUTS

In general, Mexican avocado production has been a profitable activity,
due to good domestic retail prices and a relatively stable cost of
production. However, growers pointed out that production costs do vary
depending on the inputs, type of land and technology used. For MY
2004/05, cost of production per hectare is expected to be \$35,000 --
\$37,500 pesos (USD \$3,073 -- USD \$3,292). Currently, producers'
implementation of the Mexican Ministry of Agriculture's (SAGARPA)
program of non-mandatory food safety measures has slightly increased
costs of production compared to MY 2003/04, as it has entailed the
installation of incinerators, lavatories, and orchard sanitary measures
to control pests and rodents. Although some producers are reluctant to
invest in these measures since additional profits would only materialize
in the medium- to long-term, most producers are expected to implement
SAGARPA's recommended measures as doing so elevates the image of Mexican
avocados as a sanitary product in foreign markets. According to industry
sources, the cost of production per hectare for avocados in MY 2003/04
was between \$34,000 -- \$37,000 pesos (USD \$2,987 -- USD \$3,251).

# YIELDS

According to official sources, average yields for MY 2004/05 are
forecast at 10 MT/ha. MY 2003/04 yield figures were revised downward to
9.45 MT/ha, according to more recent official data.

# 

# POLICY 

Mexico continues to successfully implement phytosanitary requirements
and good manufacturing practices for the transportation of fresh
avocados within the country (see MX2080). These are being broadly
implemented and applied among the authorized packing companies. Private
and official sources are both expecting that, by 2005, all Michoacan
producers and packers will be implementing SAGARPA's recommended good
manufacturing practices and other food safety measures.

# CONSUMPTION

MY 2004/05 fresh domestic consumption is forecast at 860,000 MT, an
11-percent increase from MY 2003/04, due to large production and good
marketing strategies promoting the health benefits of avocado
consumption as a staple food. The vast majority of Mexico's avocado
production continues to be consumed domestically. Private sources
indicate that domestic consumption, despite the record export forecast,
would remain unaffected as the large crop will allow producers and
exporters to adequately fulfill both U.S. and international demand.

MY 2004/05 processing consumption is forecast at 35,000 MT, due to the
large crop, but this figure is still consistent with historical
averages. The MY 2003/04 figures for fresh and processing consumption
were revised downward, due to smaller-than-expected supplies and
increased exports. Total average per capita consumption in Mexico is
around 8 kg, which is above the world average of 3 to 5 kg.

# 

# AVOCADO PRICES

MY 2004/05 domestic prices are expected to be attractive at US\$ 23.00
per 11.8 kg (26 lbs) box. Export prices in MY 2003/04 were around
\$21.00 per box.

+---------------------+--------------+-------------+-----------------+
| ###### WHOLE        |              |             |                 |
| SALE AVOCADO PRICES |              |             |                 |
+---------------------+--------------+-------------+-----------------+
| ###### Month        | **2003**     | **2004**    | **Change %**    |
+---------------------+--------------+-------------+-----------------+
| **January**         | 8.75         | 7.39        | (15.54)         |
+---------------------+--------------+-------------+-----------------+
| **February**        | 9.00         | 8.31        | (7.67)          |
+---------------------+--------------+-------------+-----------------+
| **March**           | 9.15         | 9.15        | \-              |
+---------------------+--------------+-------------+-----------------+
| **April**           | 9.76         | 10.91       | 11.78           |
+---------------------+--------------+-------------+-----------------+
| **May**             | 14.65        | 11.78       | (19.59)         |
+---------------------+--------------+-------------+-----------------+
| **June**            | 14.71        | 12.01       | (18.35)         |
+---------------------+--------------+-------------+-----------------+
| **July**            | 13.28        | 11.67       | (12.12)         |
+---------------------+--------------+-------------+-----------------+
| **August**          | 13.76        | 11.47       | 14.79           |
+---------------------+--------------+-------------+-----------------+
| **September**       | 9.87         | 11.33       | 18.07           |
+---------------------+--------------+-------------+-----------------+
| **October**         | 8.69         | 10.26       | 8.66            |
+---------------------+--------------+-------------+-----------------+
| **November**        | N/A          | N/A         | N/A             |
+---------------------+--------------+-------------+-----------------+
| **December**        | N/A          | N/A         | N/A             |
+---------------------+--------------+-------------+-----------------+
| Pesos/kilogram      |              |             |                 |
+---------------------+--------------+-------------+-----------------+
| Source: Sevicio     |              |             |                 |
| Nacional de         |              |             |                 |
| Informacion de      |              |             |                 |
| Mercados            |              |             |                 |
|                     |              |             |                 |
| 2003 Exchange Rate  |              |             |                 |
| Avg.: U.S.\$ 1.00 = |              |             |                 |
| \$ 10.79 pesos      |              |             |                 |
|                     |              |             |                 |
| November 4, 2004    |              |             |                 |
| exchange rate U.S.  |              |             |                 |
| \$ 1.00 = \$ 11.42  |              |             |                 |
| pesos               |              |             |                 |
+---------------------+--------------+-------------+-----------------+

# 

# TRADE

Mexican avocado exports are forecast to reach a record level of 135,000
MT in MY 2004/05, a 29-percent increase, due mainly to larger production
and the expectation of year-round market access for most of the 50 U.S.
states. Currently, Mexican Hass avocados can only be distributed in 31
U.S. states. Producers have been concerned for some time that the
gradual opening of the U.S. market may lead to saturation of that market
and to a decline in prices. To that end, Michoacan producers and
exporters have worked together to limit their avocado exports by
harvesting only 1-2 MT/hectare. However, Mexican producers and exporters
have indicated that they are considering bypassing this prevailing
practice in the event of year-round access to most of the 50 U.S.
states, but only to the extent to which they are still able to avoid
market saturation.

Growers have forecast MY 2004/05 avocado exports to the United States at
100,000 -- 120,000 MT in the event of a year-round market opening to
most of the 50 U.S. states, but FAS/Mexico forecasts 75,000 MT given the
Michoacan growers' conservative harvesting practice and the likelihood
of the complete market opening occurring midway through the marketing
year. Michoacan growers currently harvest between 1-2 MT/ha, but have
the ability to harvest 10 MT/ha, if there is year-round access to most
of the 50 U.S. states and there is no threat of market saturation.
FAS/Mexico forecasts harvesting conservatively at approximately 3 MT/ha.
Twenty-two packers are officially considered eligible to export Mexican
avocados to the United States under the APHIS export program.

MY 2003/04 and MY 2002/03 export figures have been revised downward to
reflect fresh avocado exports only. Previous export figures had
indicated both fresh and processed avocado exports. Nevertheless, MY
2003/04 exports are estimated at 105,000 MT, an increase of 38 percent
over the MY 2002/03 revised figure, due to better prices in foreign
markets. MY 2002/03 figures were revised to 76,000 MT.

![](media/image3.wmf)

According to both official and private sources, the export market
continues to be profitable to producers. Official data indicates that
most Mexican avocados were exported to the United States, France, El
Salvador, Canada and Japan.

# TRADE MATRIX

+-----------------+------------+---+-----------------+-----------+----+
| **[Avocado H.S. |            |   | **[Units:       |           |    |
| 0804.40         |            |   | MT              |           |    |
| ]{.smallcaps}** |            |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[Exports for  |            |   |                 |           |    |
| (Jan-Dec)       |            |   |                 |           |    |
| to:             |            |   |                 |           |    |
| ]{.smallcaps}** |            |   |                 |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[CY           |            |   | ####### CY 2004 |           |    |
| 2003            |            |   |                 |           |    |
| ]{.smallcaps}** |            |   |                 |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[U.S.         | [32,694]{. |   | **[U.S.         | 24,813    |    |
| ]{.smallcaps}** | smallcaps} |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[France       | [15,543]{. |   | **[Canada       | 7,336     |    |
| ]{.smallcaps}** | smallcaps} |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[El           | [10,495]{. |   | **[France       | 6,903     |    |
| Salvador        | smallcaps} |   | ]{.smallcaps}** |           |    |
| ]{.smallcaps}** |            |   |                 |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[Canada       | [8,320]{.  |   | **[El           | 6,857     |    |
| ]{.smallcaps}** | smallcaps} |   | Salvador        |           |    |
|                 |            |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[Japan        | [6,094]{.  |   | **[Japan        | 6,754     |    |
| ]{.smallcaps}** | smallcaps} |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[Other        | [17,165]{. |   | **[Other        | 14,115    |    |
| ]{.smallcaps}** | smallcaps} |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[Total        | [90,311]{. |   | **[Total        | 66,778    |    |
| ]{.smallcaps}** | smallcaps} |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+

+-----------------+------------+---+-----------------+-----------+----+
| **[Avocado H.S. |            |   | **[Units:       |           |    |
| 0804.40         |            |   | MT              |           |    |
| ]{.smallcaps}** |            |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[Imports for  |            |   |                 |           |    |
| (Jan-Dec)       |            |   |                 |           |    |
| from:           |            |   |                 |           |    |
| ]{.smallcaps}** |            |   |                 |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| ####### CY 2003 |            |   | **[CY           |           |    |
|                 |            |   | 2004            |           |    |
|                 |            |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[U.S.         | [0]{.      |   | **[U.S.         | 26        |    |
| ]{.smallcaps}** | smallcaps} |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[Other        | [0]{.      |   | **[Other        | 0         |    |
| ]{.smallcaps}** | smallcaps} |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+
| **[Total        | [0]{.      |   | **[Total        | 26        |    |
| ]{.smallcaps}** | smallcaps} |   | ]{.smallcaps}** |           |    |
+-----------------+------------+---+-----------------+-----------+----+

**Source: World Trade Atlas, Mexico Edition.**

As of January-August 2004.

# 

# TRADE POLICY

Fresh avocado imports (HS 08.04.40.01) from the United States are
subject to a zero duty. Imported avocados are also subject to
phytosanitary and sanitary inspections by SAGARPA.

[]{.mark}

# MARKETING

If year-round market access to most of the 50 U.S. states is granted,
the Michoacan Packers and Exporters Association (APEAM) plans to conduct
a US\$ 3 million campaign to promote avocado consumption in those U.S.
states with large hispanic populations. This campaign will advertise the
health benefits of high-quality Mexican produce, like avocados, when
consumed as a staple food.

#