""

Required Report - public distribution

**Date:** 10/14/2003

**GAIN Report Number:** MX3137

MX3137

**Mexico**

**Strawberries**

**Annual**

**2003**

**Approved by:**

![](media/image1.wmf)David Williams

#### Mexico City

**Prepared by:**

Dulce Flores

**Report Highlights:**

Fresh strawberry production for MY 2003/04 is not expected to increase
over MY 2002/03 production levels. Michoacan, Guanajuato and Baja
California continue to be the main producers and exporters of Mexico's
strawberries to the U.S. Exports of both fresh and frozen strawberries
are expected to increase, due to the weakening of the peso against the
U.S. dollar.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Mexico \[MX1\]

\[MX\]

Table of Contents

[**SECTION I. SITUATION AND OUTLOOK.
3**](#section-i.-situation-and-outlook.)

[FRESH STRAWBERRIES 3](#fresh-strawberries)

[Production 3](#production)

[CONSUMPTION 4](#consumption)

[TRADE 5](#trade)

[MARKETING 5](#marketing)

[FROZEN STRAWBERRIES 6](#frozen-strawberries)

[PRODUCTION 6](#production-1)

[CONSUMPTION 7](#consumption-1)

[TRADE AND MARKETING 7](#trade-and-marketing)

[SECTION II. STATISTICAL TABLES 8](#section-ii.-statistical-tables)

[Fresh Strawberries 8](#fresh-strawberries-1)

[Frozen Strawberries 9](#frozen-strawberries-1)

[PRICES 10](#prices)

[TRADE MATRIX 10](#trade-matrix)

# SECTION I. SITUATION AND OUTLOOK.

# FRESH STRAWBERRIES

## Production

Strawberry production for marketing year 2003/04 (August/July) is
forecast to remain steady at 140,000 MT, based on the assumption that
growing conditions and area planted are similar to those in MY 2002/03.
However, according to industry, there has been a trend to reduce
strawberry planted area, due to low market prices in previous years, no
access to credits, and increases in the costs of production. Industry
maintains that this trend is most obvious in the state of Guanajuato,
where area planted has been fluctuating. The state of Michoacan has
maintained almost the same area planted. Growers indicate that this
state is better organized with regard to strawberry production and trade
as evidenced by the State Strawberry Council's regulation of strategies
to handle harvest, packing, industrialization and commercialization of
strawberries in both the domestic and international markets. Area
planted for MY 2003/04 is forecast at 5,800 Ha, the same as in MY
2002/03. Strawberry production estimates, as well as area planted and
harvested for MY 2001/02 and 2002/03 were revised upward based on
official estimates. According to official information, after consecutive
years of decreasing area, the state of Guanajuato increased area planted
in MY 2002/03. However, the industry believes these estimates to be
high.

Over ninety percent of the strawberries produced in Mexico are grown in
the states of Michoacan, Guanajuato, and Baja California. Scattered
plantings can also be found in the states of Jalisco, Aguascalientes,
Mexico, Morelos, Sinaloa, Veracruz and Zacatecas. Mexico grows many
strawberry varieties. These include Camarrosa, Driscoll, Duran,
Pacifico, Parker, Aroma, Chandler, Seascape, Pajaro, Solana, Selva, and
Oso Grande. According to growers, the Camarrosa disease resistant
variety from California is planted in about 25 percent of the area in
Guanajuato, and about 40 percent of the area is planted with the
Chandler variety. In Zamora, Michoacan, these two varieties account for
approximately 80 percent of the area planted to strawberries. The
harvest season for Michoacan and Guanajuato is November‑June, with peak
harvest for Michoacan from November to February, and from February to
April for Guanajuato. The harvest season for Baja California is
January‑June, with the peak harvest in March‑April.

The state of Michoacan, which is the most important growing region for
the winter crop, is the first one to reach the market. According to
producers, approximately 70 to 80 percent of the Michoacan strawberry
production goes to the processing industry and 20 to 30 percent to the
fresh export market. Growers living in the neighboring state of
Guanajuato grow strawberries in Michoacan because they can harvest them
earlier and have better opportunities to receive higher prices and
profits for their crop. The state of Guanajuato, which is more important
for the summer cycle, markets its crop after the crop from Michoacan,
and receives lower prices. According to the industry, growers in
Guanajuato have switched to planting less risky crops, such as broccoli,
cauliflower, sorghum, wheat, or tomatoes in the areas formerly planted
with strawberries. Growers consider strawberries a risky crop because
their high production costs, brought on by intensive water usage and
lack of affordable credit, can make them unprofitable, depending on
prevailing market prices. Producers indicate that approximately 30 to 40
percent of the strawberry production in Guanajuato goes to the
processing industry for jams, yogurt and other food products. The state
of Baja California harvests during the winter cycle and its strawberries
are also marketed early in the season and therefore garner higher
prices. Most of Baja's strawberry production goes to the fresh export
market. However, some fruit from Baja is being processed in Guanajuato.

Strawberry yields in Mexico vary greatly depending upon variety, area,
and weather conditions. If weather conditions remain good for MY
2003/04, overall yields are expected to be about 24 MT/Ha. Well-tended
areas, however, can produce as much as 35 MT/Ha. Yields in Baja
California tend to be the highest and can reach 40-50 MT/Ha.

Average costs of production for MY 2003/04 are expected to approximate
MY 2002/03 production costs. The average cost to establish a hectare of
strawberries in Guanajuato is approximately 90,000 to 100,000 pesos/Ha
(US\$7,964 to \$8,850/Ha) with advanced technology, and about 60,000
pesos/Ha (US\$5,310/Ha) with less quality control technology. However,
this less advanced technology is not as competitive and is therefore
being used less. Michoacan average production costs are higher at
approximately 115,000 to 120,000 pesos/Ha (US\$10,177 to \$10,619/Ha)
with advanced technology, and less than 100,000 pesos/Ha (US\$8,850/Ha)
for less quality control technology. Advanced technology costs include
drip irrigation and plastic mulch; the latter averages US\$800 per
hectare. The average production cost for an already established bed is
approximately 46,000 to 56,000 pesos/Ha (US\$4,070 to \$4,955/Ha). Basic
expenses include nursery establishment, field preparation, strawberry
plants, fertilizers and fungicides, irrigation, and harvesting. The most
expensive input has always been the strawberry plants which are imported
from the United States. Payment of royalties has been an issue, as
royalties have almost more than doubled.

All Mexican strawberries are irrigated. Labor costs are about 75 to 100
pesos/per shift (US\$6.63 to 8.85 per shift). Some workers want to be
paid by the number of baskets picked rather than by the shift. Labor is
especially scarce in Guanajuato because several new industries like the
automotive, steel and "maquiladoras" are hiring farm laborers away. As a
result, strawberry producers have to pay higher wages --- practically 90
to 110 pesos/shift (US\$7.96 to \$9.73/shift) --- to attract workers.
(Note: the official minimum wage for farm workers is approximately
US\$3.98 per day.)

## CONSUMPTION

Fresh strawberry consumption for MY 2003/04 is forecast at 62,800 MT, a
slight decrease compared to MY 2002/03, due to expected higher retail
prices for domestic and imported strawberries. The tendency is to serve
the international market first, so the final consumption figure will
ultimately depend on the strength of the consumer purchasing power and
the demand for fresh strawberries from the international market. The MY
2002/03 consumption estimate was revised upward, reflecting stronger
demand. In fact, processing plants indicate that, despite the fact that
international demand for processed strawberries is high, the processing
industry has been unable to increase its sales, due to increased demand
from the fresh domestic market. Consumption data for MY 2001/02 was
revised upward, also reflecting strong demand. The average Mexican
consumer does not discriminate between domestic and imported
strawberries. The major challenge that U.S. exporters face in the
Mexican market is to increase consumer awareness of varietal
differences. According to wholesalers, the number one preference is the
Driscoll variety because of its size, color and flavor, followed by
Duran and other varieties. As most strawberries in Baja California are
produced for the export market, these tend to be of the best quality,
followed by those from Guanajuato and Michoacan.

Farmgate prices for strawberries for the fresh domestic market for MY
2003/04 are expected to be similar to MY 2002/03. Prices for MY 2002/03
were approximately 5.00 pesos/kg (US\$0.44/kg) for average quality and
about \$6.00 pesos/kg (US\$0.53/kg) for good quality. Producers
indicated, however, that farmgate prices are also influenced by the
international market. Domestic market prices for MY 2002/03 were on
average lower than those in MY 2001/02. Prices for the domestic market
are usually higher during the export season in the winter months.
Imported strawberries from the United States began in July 2003 at
approximately \$21.00 pesos/kg (US\$1.85/kg) and increased to nearly
28.00 pesos/Kg (US\$2.47/Kg) at the wholesale market at the end of
August 2003, when there are almost no domestic strawberries available.

## TRADE

The major market for Mexican strawberry exports is the United States,
with smaller amounts shipped by air to Europe. Fresh strawberry exports
for MY 2003/04 are forecast to increase slightly to 38,000 MT, unless
there is strong demand from the domestic market. It is expected that the
weakening of the peso against the U.S. dollar will boost Mexican
strawberry exports for MY 2003/04. The export estimates for MY 2001/02
and 2002/03 have been revised upward, based on official data. Imports of
fresh U.S. strawberries supply the Mexican market from May through
November. Imports of U.S. strawberries for MY 2003/04 are not expected
to increase much compared to MY 2002/03, because the strengthening of
the U.S. dollar (vs. the Mexican peso) is expected to increase prices
significantly. Strawberry imports for MY 2001/02 and 2002/03 were
revised upward, based on official data. Growers indicate that some
imported strawberries were used by the processing industry.

Under NAFTA, fresh strawberry imports from the United States are no
longer subject to tariffs. Imports from non‑NAFTA countries are charged
a 20 percent duty. Mexican strawberry exports to the United States are
also no longer subject to tariffs. The tariff classification number is
08.10.10.01.

## MARKETING

The quantity of strawberries imported from the United States has been
growing for the past two years, in response, in part, to promotional
campaigns by the California Strawberry Commission in chain stores in
several Mexican cities. Wholesalers are provided with point of sale
materials and recipes which are to be delivered to their clients and
customers respectively. Although the import season begins in May, the
highest volumes are imported from June through October. Traditionally,
imported fruit becomes scarce by November, when imports taper off and
domestic production is harvested. The United States is expected to
continue to be the main supplier to the Mexican market. Imported
strawberries are almost exclusively from California. The quality is good
and they are packed using a system that eliminates oxygen, thus
extending the berries' shelf life.

The best quality strawberries destined for the domestic market are
packed in 12 lb/boxes and sold in supermarkets and grocery stores. Lower
quality strawberries are generally packed in 12/13 lb baskets and are
sold at street markets or along highways.

Unfortunately, there is still limited understanding within the Mexican
market as to how to care for and preserve strawberries in the stores,
despite the fact that several store managers have learned how to better
display, sell and preserve strawberries through technical seminars which
have been sponsored by the California Strawberry Commission in more than
30 cities. Moreover, the Mexican strawberry market still has a long way
to go before there is brand recognition and before consumers
disassociate strawberries with the no-longer used, unsanitary washing
techniques that some stores used for many years.

# FROZEN STRAWBERRIES

## PRODUCTION

Mexican frozen strawberry production for MY 2003/2004 (Aug/July) is
forecast to remain steady at 51,200 MT, due to a continued competition
with the fresh market. According to industry sources, frozen strawberry
production has had problems in past years, due to the lack of
strawberries for processing in the domestic market. Growers indicate
that low international market prices in past years has driven down
production of frozen strawberries, and even though demand has been
picking up, there is still not enough fresh product. Total production,
however, may rise if more strawberries are diverted from the fresh
market. Producers indicated that this could only happen if international
market prices for processed product continue to be attractive. Growers
and buyers/processors generally operate separately and there is very
little integration with respect to marketing firms providing input to
growers. In Guanajuato, the state government, growers, and agroindustry,
have begun to work together to implement internationally recognized
phytosanitary and fruit quality standards. Some marketing companies are
contemplating marketing integration with growers to have better quality
and verification controls. Some companies in Michoacan have entered into
joint ventures with foreign companies which have brought more
integration and better financing. Together they have implemented
improvements in quality control. However, despite these efforts, some
strawberry processing companies have closed and others can only survive
by processing other fruits.

Frozen strawberry production for MY 2002/03 was revised only slightly
upward because of better international demand offset by the expectation
of less fruit available, due to reduced plantings in Guanajuato. Frozen
strawberry production for MY 2001/02 was revised upward based on
available information and stronger international demand. Information on
frozen strawberry production is very difficult to obtain because the
Mexican government does not maintain it and industry information tends
to be limited. However, industry sources did indicate that costs of
production for strawberries have also increased production costs for
frozen strawberries.

There are approximately 27 strawberry processing plants in Michoacan and
about nine plants in Guanajuato. Some of these plants operate
intermittently, due to frequent changes in ownership and problems in
leasing out the facilities. Also, some plants process other fruits
during the off-season, thereby allowing them to work all year round.
Some plants, however, have closed operations, due to lack of affordable
credit from Mexican financial institutions. Those plants that have joint
ventures with foreign companies have access to foreign financing. Some
other plants receive financing from U.S. importers. The majority of the
plants are equipped to make all types of frozen/processed strawberries,
including frozen with sugar, frozen without sugar, whole and sliced, and
individual-quick-frozen (IQF). Most of the processed strawberries either
are packed whole or sliced with sugar. The processors use a wide variety
of packaging, including 50 gallon drums, 2.5 gallon containers, or
consumer ready packages.

The processing industry generally competes with the fresh market for
fruit, with the fresh product selling at higher prices. The farmgate
price for strawberries destined for processing for MY 2002/03 was
approximately 4.50 to 5.50 pesos/Kg (US\$0.39 to 0.48/Kg), while average
farmgate prices for the fresh market were on average 5.00 to 6.00
pesos/kg (US\$0.44 to \$0.53/kg). Strawberry producers expect farmgate
prices for processing to rise to 5.50 pesos/kg or more (US\$0.49/kg) for
MY 2003/04.

## CONSUMPTION

Frozen strawberry consumption for MY 2003/04 is forecast to decrease
compared to MY 2002/03, due to expected higher retail prices. As with
fresh strawberries, the industry serves the international market first.
However, in MY 2002/03, the domestic market began to pay slightly better
than international markets, due to a growth in demand. According to
industry, annual average consumption generally ranges between 10,500 to
11,500 MT. The industry recognizes that there is a need for more
advertising and campaigns to promote this product. Industry incorporates
frozen strawberries in products like jams, breads and yogurts. The MY
2002/03 consumption estimate was revised upward reflecting an increase
in demand. Consumption for MY 2001/02 was also revised upward based on
available information. There are generally no stocks of frozen
strawberries because of high storage costs.

## TRADE AND MARKETING

The export forecast for frozen strawberries for MY 2003/04 is expected
to increase over MY 2002/03 estimates, due to good international demand.
Also, the weakening of the peso against the U.S. dollar will boost
Mexican frozen strawberry exports. Export estimates for MY 2002/03 were
revised upward reflecting stronger international demand and good prices.
However, the industry reports that demand for frozen strawberries has
not yet been met, due to the low availability of strawberries.
International market prices in CY 2002 began at US\$0.50/lb, while
international prices for CY 2003 began higher at US\$0.58/lb leading
Mexico to export more volume. Final export estimates for MY 2001/02 were
also revised upward based on available information.

Frozen strawberry imports are still not significant relative to the
total Mexican processed strawberry market. Import data, however, show a
slight increase in imports, due to increased domestic demand. Frozen
strawberry imports for MY 2003/04 are forecast at 600 MT, less than in
MY 2003/04, due to the unfavorable exchange rate. Import estimates for
MY 2002/03 were revised upward, due to stronger demand. Estimates for MY
2001/02 were revised upward based on recent trade information. There are
no promotional campaigns for frozen strawberries in Mexico.

NAFTA tariffs in 2003 are zero. Mexico charges a 20 percent duty on
strawberry imports from non‑NAFTA countries. There currently are no
import licensing requirements for frozen strawberries. The tariff
classification number is 08.11.10.01.

# SECTION II. STATISTICAL TABLES

## Fresh Strawberries 

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

  Country       México                                                     

  Commodity     Fresh                                           (HA)(MT)   
                Strawberries                                               

                2001 Revised              2002                  2003       
                                          Estimate              Forecast   

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

  Market Year   08/2001                   08/2002               08/2003    
  Begin                                                                    

  Area Planted  5655           5882       5660       5800       0          5800

  Area          5575           5849       5580       5750       0          5750
  Harvested                                                                

  TOTAL         130000         142244     131000     140000     0          140000
  Production                                                               

  Imports,      10700          11306      10900      11939      0          12000
  Fresh                                                                    

  TOTAL SUPPLY  140700         153550     141900     151939     0          152000

  Exports,      37500          37726      37500      37782      0          38000
  Fresh                                                                    

  Domestic      54540          64824      55400      62957      0          62800
  Fresh Market                                                             

  For           48660          51000      49000      51200      0          51200
  Processing                                                               

  TOTAL         140700         153550     141900     151939     0          152000
  UTILIZATION                                                              
  ------------- -------------- ---------- ---------- ---------- ---------- ----------

## Frozen Strawberries

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

  Country        Mexico                                                     

  Commodity      Frozen                               (MT)                  
                 Strawberries                                               

                 2001 Revised              2002                  2003       
                                           Estimate              Forecast   

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

  Market Year    08/2001                   08/2002               08/2003    
  Begin                                                                     

  Deliv. To      0              0          0          0          0          0
  Processors                                                                

  Beginning      0              0          0          0          0          0
  Stocks                                                                    

  Production     48660          51000      49000      51200      0          51200

  Imports        265            405        290        1786       0          600

  TOTAL SUPPLY   48925          51405      49290      52986      0          51800

  Exports        38275          40204      38590      41378      0          41500

  Domestic       10650          11201      10700      11608      0          10300
  Consumption                                                               

  Ending Stocks  0              0          0          0          0          0

  TOTAL          48925          51405      49290      52986      0          52100
  DISTRIBUTION                                                              
  -------------- -------------- ---------- ---------- ---------- ---------- ----------

## PRICES

+------------------+-------------+---+-------------+---+----------------+
| [Average Monthly |             |   |             |   |                |
| Strawberry       |             |   |             |   |                |
| Pri              |             |   |             |   |                |
| ces]{.smallcaps} |             |   |             |   |                |
|                  |             |   |             |   |                |
| [Pesos per       |             |   |             |   |                |
| kilog            |             |   |             |   |                |
| ram]{.smallcaps} |             |   |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [Mo              | 2002        |   | 2003        |   | Change %       |
| nth]{.smallcaps} |             |   |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [Janu            | 15.62       |   | 12.07       |   | (22.73)        |
| ary]{.smallcaps} |             |   |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [Febru           | 11.45       |   | 10.21       |   | (10.83)        |
| ary]{.smallcaps} |             |   |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [Ma              | 10.83       |   | 10.85       |   | 0.18           |
| rch]{.smallcaps} |             |   |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [Ap              | 11.66       |   | 11.61       |   | (0.43)         |
| ril]{.smallcaps} |             |   |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [                | 12.83       |   | 17.70       |   | 37.96          |
| May]{.smallcaps} |             |   |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [J               | 14.16       |   | 18.56       |   | 31.07          |
| une]{.smallcaps} |             |   |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [J               | 22.83       | \ | 20.95       | \ | (8.23)         |
| uly]{.smallcaps} |             | * |             | * |                |
+------------------+-------------+---+-------------+---+----------------+
| [Aug             | 28.00       | \ | 27.84       | \ | (0.57)         |
| ust]{.smallcaps} |             | * |             | * |                |
+------------------+-------------+---+-------------+---+----------------+
| [Septem          | 21.64       | \ | N/A         |   | N/A            |
| ber]{.smallcaps} |             | * |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [Octo            | 20.32       | \ | N/A         |   | N/A            |
| ber]{.smallcaps} |             | * |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [Novem           | 21.80       | \ | N/A         |   | N/A            |
| ber]{.smallcaps} |             | * |             |   |                |
+------------------+-------------+---+-------------+---+----------------+
| [Decem           | 19.83       |   | N/A         |   | N/A            |
| ber]{.smallcaps} |             |   |             |   |                |
+------------------+-------------+---+-------------+---+----------------+

[SOURCE: Servicio Nacional de Informacion de Mercados]{.smallcaps}

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

2003 Exchange Rate September 15, 2003 US\$1.00=\$10.97 pesos

[Note: - \"\*\" represents prices for imported strawberries. Domestic
strawberries]{.smallcaps}

[prices were not available. Other prices represent domestic prices
only.]{.smallcaps}

## 

## 

## TRADE MATRIX

  ------------------- -------- -------- ------------------ -------- --------
  Strawberries, Fresh                   UNITS: METRIC TONS          
  H.S. 0810.10                                                      

  EXPORTS TO:         2002     2003\*   IMPORTS FROM:      2002     2003\*

  U.S.                37,386   36,298   U.S.               13,745   3,926

  OTHER                                 OTHER                       

  CANADA              31       96                          0        0

  TOTAL OF OTHER      31       96       TOTAL OF OTHER     0        0

  OTHERS NOT LISTED   2        4        OTHERS NOT LISTED  0        0

  GRAND TOTAL         37,419   36,398   GRAND TOTAL        13,745   3,926
  ------------------- -------- -------- ------------------ -------- --------

**SOURCE**: Global Trade Information Services, Inc. \"World Trade
Atlas\" Mexico Edition.

\* As of June 2003.

  ------------------- -------- -------- ------------------ -------- --------
  Strawberries,                         UNITS: METRIC TONS          
  Frozen H.S. 0811.10                                               

  EXPORTS TO:         2002     2003\*   IMPORTS FROM:      2002     2003\*

  U.S.                37,390   39,233   U.S.               1,079    118

  OTHER                                 OTHER                       

  CANADA              1,076    516      CHILE              264      80

  JAPAN               1,056    221      AUSTRIA            123      122

  TOTAL OF OTHER      2,132    737      TOTAL OF OTHER     387      202

  OTHERS NOT LISTED   12       72       OTHERS NOT LISTED  157      22

  GRAND TOTAL         39,534   40,042   GRAND TOTAL        1,623    342
  ------------------- -------- -------- ------------------ -------- --------

**SOURCE**: Global Trade Information Services, Inc. \"World Trade
Atlas\" Mexico Edition.

\* As of June 2003.