""

Required Report - public distribution **Date:** 11/27/2002

**GAIN Report Number:** MX2162

MX2162

**Mexico**

**Citrus**

**Annual**

2002

**Approved by:**

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

#### U. S. Embassy

**Prepared by:**

Dulce Flores/Gabriel Hernandez

**Report Highlights:**

Mexican orange and grapefruit production for MY 2002/03 is forecast to
be lower compared to MY 2001/02 production, due to dry weather
conditions. Lime production is forecast to increase slightly for MY
2002/03, due to more trees coming into production. FCOJ production is
forecast to decrease for MY 2003, due to less available fruit.

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)

[Citrus Situation 3](#citrus-situation)

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

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

[Orange Prices 8](#orange-prices)

[Key Lime Prices 10](#key-lime-prices)

[Grapefruit Prices 11](#grapefruit-prices)

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

[FRESH ORANGES 13](#fresh-oranges)

[Production 13](#production)

[Consumption 14](#consumption)

[Trade 14](#trade)

[Marketing 15](#marketing)

[FRESH CITRUS, OTHER 15](#fresh-citrus-other)

[Production 15](#production-1)

[Consumption 17](#consumption-1)

[Trade 17](#trade-1)

[FRESH GRAPEFRUIT 18](#fresh-grapefruit)

[Production 18](#production-2)

[Consumption 19](#consumption-2)

[Trade 19](#trade-2)

[FROZEN CONCENTRATE ORANGE JUICE 19](#frozen-concentrate-orange-juice)

[Production 19](#production-3)

[Consumption 20](#consumption-3)

[**Trade 20**](#trade-3)

#   {#section .unnumbered}

# SECTION I. Situation and Outlook

# Citrus Situation

Dry weather conditions along the Gulf of Mexico affected overall citrus
production for MY 2002/03, however, the most affected product was
oranges. The fresh orange production forecast for MY 2002/03
(November‑October) is 3.7 MMT, a decrease compared to MY 2001/02. Prices
for oranges are expected to increase due to smaller supplies. Frozen
concentrate orange juice (FCOJ) production for MY 2003
(January-December) is also forecast to be down at 36,000 MT compared to
MY 2002 production because of lower orange production and probable
higher prices for fresh oranges. Therefore, exports of FCOJ for MY 2003
are forecast to decrease to approximately 33,350 MT because of a shorter
availability of domestic oranges for processing.

Total production of Key limes and Persian limes for MY 2002/03 is
forecast at 1,600,000 MT, slightly higher than MY 2001/02 production,
due to more acreage coming into production. Persian and Key Lime exports
for MY 2002/03 are forecast at 245,000 MT, a slight increase from the
preceding year estimates, due to expected higher prices compared to MY
2001/02.

Grapefruit production for MY 2002/03 is forecast at 270,000 MT. Growers
expect production to recover from the dry weather conditions that
affected output along the Gulf of Mexico from Tabasco to Tamaulipas. The
state of Michoacan, however, enjoyed good weather conditions and
production was good and increasing. Grapefruit exports for MY 2002/03
are forecast to reach 4,000 MT. According to growers, demand from the
European market has been growing steadily. On the other hand, most of
the imported grapefruit from the U.S. is processed and shipped back to
the U.S.

# SECTION II. Statistical Tables

# 

# Fresh Orange Table

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

  Country              Mexico                                                        

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

                       Revised   2000     Preliminary   2001              Forecast   2002

                       Old       New      Old           New               Old        New

  Market Year Begin    11/2000            11/2001                         11/2002    

  Area Planted         340805    340805   335000        347000            0          348000

  Area Harvested       324816    324816   318000        328000            0          320000

  Bearing Trees        65612     65612    64236         66256             0          64640

  Non‑Bearing Trees    3230      3230     3434          3838              0          5656

  TOTAL No. Of Trees   68842     68842    67670         70094             0          70296

  Production           3885      3885     3800          4000              0          3600

  Imports              27        31       27            31                0          32

  TOTAL SUPPLY         3912      3916     3827          4031              0          3632

  Exports              19        19       20            19                0          17

  Fresh Dom.           3493      3497     3397          3562              0          3255
  Consumption                                                                        

  Processing           400       400      410           450               0          360

  TOTAL DISTRIBUTION   3912      3916     3827          4031              0          3632
  -------------------- --------- -------- ------------- ----------------- ---------- --------

#  Fresh Citrus, Other Table

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

  Country              Mexico                                                             

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

                       Revised        2000     Preliminary   2001              Forecast   2002

                       Old            New      Old           New               Old        New

  Market Year Begin    11/2000                 11/2001                         11/2002    

  Area Planted         132000         131826   136000        138000            0          140000

  Area Harvested       126000         124660   127000        127000            0          129000

  Bearing Trees        24444          24184    24765         24765             0          25155

  Non‑Bearing Trees    1164           1390     1755          2134              0          2134

  TOTAL No. Of Trees   25608          25574    26520         26899             0          27289

  Production           1630           1573     1650          1600              0          1620

  Imports              1              2        1             1                 0          1

  TOTAL SUPPLY         1631           1575     1651          1601              0          1621

  Exports              245            247      250           240               0          245

  Fresh Dom.           1118           1076     1133          1105              0          1116
  Consumption                                                                             

  Processing           268            252      268           256               0          260

  TOTAL DISTRIBUTION   1631           1575     1651          1601              0          1621
  -------------------- -------------- -------- ------------- ----------------- ---------- --------

#  Fresh Grapefruit Table

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

  Country              Mexico                                                           

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

                       Revised      2000     Preliminary   2001              Forecast   2002

                       Old          New      Old           New               Old        New

  Market Year Begin    11/2000               11/2001                         11/2002    

  Area Planted         13200        14626    13500         14700             0          14400

  Area Harvested       12800        13222    12800         12600             0          13000

  Bearing Trees        2406         2485     2406          2369              0          2444

  Non‑Bearing Trees    752          263      1316          394               0          320

  TOTAL No. Of Trees   3158         2748     3722          2763              0          2764

  Production           250          320      225           250               0          270

  Imports              10           9        10            8                 0          9

  TOTAL SUPPLY         260          329      235           258               0          279

  Exports              3            7        4             2                 0          4

  Fresh Dom.           223          282      197           221               0          238
  Consumption                                                                           

  Processing           34           40       34            35                0          37

  TOTAL DISTRIBUTION   260          329      235           258               0          279
  -------------------- ------------ -------- ------------- ----------------- ---------- --------

#  Fresh Concentrate Orange Juice Table

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

  Country              Mexico                                                

  Commodity            Juice,                           Degrees              
                       Orange                           Brix (MT)            

                       Revised   2000     Preliminary   2001      Forecast   2002

                       Old       New      Old           New       Old        New

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

  Deliv. To Processors 400       400      410           450       0          360

  Beginning Stocks     3000      3000     2700          3000      0          3000

  Production           40500     40500    41000         45000     0          36000

  Imports              206       770      150           700       0          700

  TOTAL SUPPLY         43706     44270    43850         48700     0          39700

  Exports              37900     37900    37501         42350     0          33350

  Domestic Consumption 3106      3370     3349          3350      0          3350

  Ending Stocks        2700      3000     3000          3000      0          3000

  TOTAL DISTRIBUTION   43706     44270    43850         48700     0          39700
  -------------------- --------- -------- ------------- --------- ---------- --------

#  Orange Prices

+-------------------+----------------+-----------------+---------------+
| **[Wholesale      |                |                 |               |
| Orange Prices     |                |                 |               |
| (Pesos/K          |                |                 |               |
| g)]{.smallcaps}** |                |                 |               |
+-------------------+----------------+-----------------+---------------+
| Month             | 2001           | 2002            | Change        |
|                   |                |                 |               |
|                   |                |                 | \%            |
+-------------------+----------------+-----------------+---------------+
| January           | 1.30           | 1.12            | (13.85)       |
+-------------------+----------------+-----------------+---------------+
| February          | 1.27           | 1.14            | (10.24)       |
+-------------------+----------------+-----------------+---------------+
| March             | 1.27           | 1.19            | (6.30)        |
+-------------------+----------------+-----------------+---------------+
| April             | 1.30           | 1.54            | 18.46         |
+-------------------+----------------+-----------------+---------------+
| May               | 1.63           | 2.47            | 51.53         |
+-------------------+----------------+-----------------+---------------+
| June              | 1.94           | 3.30            | 7.10          |
+-------------------+----------------+-----------------+---------------+
| July              | 2.78           | 4.01            | 44.24         |
+-------------------+----------------+-----------------+---------------+
| August            | 3.53           | 4.05            | 14.73         |
+-------------------+----------------+-----------------+---------------+
| September         | 3.47           | 3.54            | 2.02          |
+-------------------+----------------+-----------------+---------------+
| October           | 1.64           | 1.69            | 3.05          |
+-------------------+----------------+-----------------+---------------+
| November          | 1.47           | 1.78\*          | 21.09         |
+-------------------+----------------+-----------------+---------------+
| December          | 1.40           | N/A             | N/A           |
+-------------------+----------------+-----------------+---------------+
|                   |                |                 |               |
+-------------------+----------------+-----------------+---------------+

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

[Avr. exchange rate for 2001 US\$1.00 = \$ 9.35 pesos]{.smallcaps}

[exchange rate November 18, 2002 US\$1.00 = \$ 10.24 pesos]{.smallcaps}

\* As of first week of November 2002.

**Persian Lime Prices**

+-------------------+----------------+-----------------+---------------+
| **[Persian Lime   |                |                 |               |
| Wholesale Prices  |                |                 |               |
| (Pesos/K          |                |                 |               |
| g)]{.smallcaps}** |                |                 |               |
+-------------------+----------------+-----------------+---------------+
| Month             | 2001           | 2002            | Change        |
|                   |                |                 |               |
|                   |                |                 | \%            |
+-------------------+----------------+-----------------+---------------+
| January           | 2.85           | 2.34            | (17.89)       |
+-------------------+----------------+-----------------+---------------+
| February          | 2.18           | 2.69            | 23.39         |
+-------------------+----------------+-----------------+---------------+
| March             | 4.80           | 4.99            | 3.96          |
+-------------------+----------------+-----------------+---------------+
| April             | 3.65           | 3.52            | (3.56)        |
+-------------------+----------------+-----------------+---------------+
| May               | 1.55           | 3.45            | 122.58        |
+-------------------+----------------+-----------------+---------------+
| June              | 1.12           | 2.26            | 101.79        |
+-------------------+----------------+-----------------+---------------+
| July              | 1.05           | 1.39            | 32.38         |
+-------------------+----------------+-----------------+---------------+
| August            | 1.14           | 1.33            | 16.67         |
+-------------------+----------------+-----------------+---------------+
| September         | 1.12           | 1.53            | 36.61         |
+-------------------+----------------+-----------------+---------------+
| October           | 0.98           | 1.37            | 39.80         |
+-------------------+----------------+-----------------+---------------+
| November          | 1.05           | 1.60\*          | 52.38         |
+-------------------+----------------+-----------------+---------------+
| December          | 1.70           | N/A             | N/A           |
+-------------------+----------------+-----------------+---------------+
|                   |                |                 |               |
+-------------------+----------------+-----------------+---------------+

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

[Avr. exchange rate for 2001 US\$1.00 = \$ 9.35 pesos]{.smallcaps}

[exchange rate November 18, 2002 US\$1.00 = \$ 10.24 pesos]{.smallcaps}

\* As of first week of November 2002.

# Key Lime Prices

+--------------------+--------------+-----------------+---------------+
| **[Key Lime        |              |                 |               |
| Wholesale Prices   |              |                 |               |
| (Pesos/            |              |                 |               |
| Kg)]{.smallcaps}** |              |                 |               |
+--------------------+--------------+-----------------+---------------+
| Month              | 2001         | 2002            | Change        |
|                    |              |                 |               |
|                    |              |                 | \%            |
+--------------------+--------------+-----------------+---------------+
| January            | 4.01         | 4.25            | 5.99          |
+--------------------+--------------+-----------------+---------------+
| February           | 3.00         | 3.74            | 24.67         |
+--------------------+--------------+-----------------+---------------+
| March              | 2.41         | 2.21            | (8.30)        |
+--------------------+--------------+-----------------+---------------+
| April              | 1.79         | 2.11            | 17.88         |
+--------------------+--------------+-----------------+---------------+
| May                | 1.86         | 2.02            | 8.60          |
+--------------------+--------------+-----------------+---------------+
| June               | 2.14         | 2.08            | (2.80)        |
+--------------------+--------------+-----------------+---------------+
| July               | 1.93         | 2.66            | 37.82         |
+--------------------+--------------+-----------------+---------------+
| August             | 2.25         | 3.04            | 35.11         |
+--------------------+--------------+-----------------+---------------+
| September          | 1.97         | 2.83            | 43.65         |
+--------------------+--------------+-----------------+---------------+
| October            | 1.94         | 2.33            | 20.10         |
+--------------------+--------------+-----------------+---------------+
| November           | 2.10         | 2.61\*          | 24.29         |
+--------------------+--------------+-----------------+---------------+
| December           | 3.18         | N/A             | N/A           |
+--------------------+--------------+-----------------+---------------+
|                    |              |                 |               |
+--------------------+--------------+-----------------+---------------+

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

[Avr. exchange rate for 2001 US\$1.00 = \$ 9.35 pesos]{.smallcaps}

[exchange rate November 18, 2002 US\$1.00 = \$ 10.24 pesos]{.smallcaps}

\* As of first week of November 2002.

# Grapefruit Prices

+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [Grapefruit  |        |        |        |   |        |        |   |        |
| Wholesale    |        |        |        |   |        |        |   |        |
| Prices]      |        |        |        |   |        |        |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
|              |        |        |        |   |        |        |   |        |
| [By Main     |        |        |        |   |        |        |   |        |
| Producer     |        |        |        |   |        |        |   |        |
| States]      |        |        |        |   |        |        |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [Month]      | [Mich  |        | [Tamau |   |        | [Ver   |   |        |
| {.smallcaps} | oacan] |        | lipas] |   |        | acruz] |   |        |
|              | {.smal |        | {.smal |   |        | {.smal |   |        |
|              | lcaps} |        | lcaps} |   |        | lcaps} |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
|              | 2001   | 2002   | 2001   |   | 2002   | 2001   |   | > 2002 |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [January]    |        |        |        |   |        | 1.90   | 1 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 6 |        |
|              |        |        |        |   |        |        | 6 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [February]   |        |        |        |   |        | 2.05   | 1 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 6 |        |
|              |        |        |        |   |        |        | 4 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [March]      |        |        |        |   |        | 2.40   |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [April]      |        |        |        |   |        | 2.90   | 3 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 0 |        |
|              |        |        |        |   |        |        | 7 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [May]        |        | 3.39   | 3.90   |   |        | 3.10   | 3 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 1 |        |
|              |        |        |        |   |        |        | 4 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [June]       | 3.30   | 3.50   | 4.25   | 3 |        |        |   |        |
| {.smallcaps} |        |        |        | . |        |        |   |        |
|              |        |        |        | 8 |        |        |   |        |
|              |        |        |        | 0 |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [July]       | 3.43   | 3.82   |        |   |        |        |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [August]     | 4.20   | 3.09   |        |   |        |        |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [September]  | 4.40   | 2.44   |        |   |        | 3.00   | 2 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 7 |        |
|              |        |        |        |   |        |        | 6 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [October]    |        |        |        |   |        | 2.16   | 2 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 4 |        |
|              |        |        |        |   |        |        | 1 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [November]   |        |        |        |   |        | 2.10   | 2 |        |
| {.smallcaps} |        |        |        |   |        |        | . |        |
|              |        |        |        |   |        |        | 2 |        |
|              |        |        |        |   |        |        | 6 |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
| [December]   |        |        |        |   |        | 1.62   |   |        |
| {.smallcaps} |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+
|              |        |        |        |   |        |        |   |        |
+--------------+--------+--------+--------+---+--------+--------+---+--------+

SOURCE: SNIM

[Average exchange rate for 2001 USD\$1.00 = \$9.35 pesos]{.smallcaps}

[exchange rate November 18, 2002 US\$1.00 = \$10.24 pesos]{.smallcaps}

Note: shaded area represents that domestic grapefruit

prices were not available.

  --------------------------------------------------------------------------
  **MONTHLY EXCHANGE                                                    
  RATE AVERAGES**                                                       
  ---------------------- ------------ --- ------------ --- ------------ ----
                         **2000**         **2001**         **2002**     

  January                9.02             9.76             9.16         

  February               9.43             9.70             9.10         

  March                  9.28             9.60             9.07         

  April                  9.37             9.33             9.14         

  May                    9.50             9.14             9.49         

  June                   9.81             9.09             9.75         

  July                   9.43             9.15             9.79         

  August                 9.27             9.12             9.83         

  September              9.33             9.40             10.05        

  October                9.52             9.45             10.09        

  November               9.50             9.25             10.23        \*

  December               9.44             9.16             n/a          

  **Annual Avg.**        **9.40**         **9.35**         **n/a**      
  --------------------------------------------------------------------------

Source: Mexican Federal Register

Note: Monthly rates are averages of daily exchange rates from the

Banco de Mexico.

\* as of November 19, 2002.

##  

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

# 

# FRESH ORANGES

# 

# Production

The fresh orange production forecast for MY 2002/03 (November‑October)
is 3.7 MMT, a decrease compared to MY 2001/02, because prevailing dry
weather conditions affected overall production. Prices for oranges are
expected to increase due to smaller supplies. Production will also be
affected because some areas in Veracruz have been abandoned, due to low
market prices and high input costs. However, some area has been offset
by orange tree plantings in northern Veracruz and San Luis Potosí, with
better technology. As the Yucatan area was damaged by Hurricane Isidore,
orange production will be down for that region. Trees were damaged and a
program to restore the area will be launched. Orange production in the
state of Yucatan was on average about 220,000 MT or about a 5 percent of
total production.

The orange production estimate for MY 2001/02 was revised upward based
on official data. Producers indicate that weather was better than
expected in most of the producing states for the main harvest, from
October to April, which corresponded to the first and second bloom. But,
for the third and fourth blooms, from April to August, dry weather
conditions affected production reducing it somewhat. The early variety
(Marsh) of oranges from Nuevo Leon and Tamaulipas was slightly shorter
than expected, thereby garnering good prices. The MY 2002/03 forecast
for oranges destined for processing is 360,000 MT, a decrease compared
to MY 2001/02, due to a shorter supply of oranges. However, the industry
indicated that international prices for frozen concentrate orange juice
prices (FCOJ) are good and it expects to be able to process enough to
cover the U.S. quota. The estimate for oranges destined for processing
for MY 2001/02 was revised upward, based on industry information and
better international prices for FCOJ. Data for MY 2000/01 remains
unchanged.

Area planted for oranges is forecast at 348,000 hectares for MY 2002/03,
a very slight increase compared to MY 2001/02 area planted. In fact,
some expansions in Veracruz have been almost offset by growers
abandoning groves or switching to other crops, due to high production
costs, wide swings in fresh orange prices, or marketing problems.
Meanwhile, the orange processing industry, which buys most of the
product in the market, has now begun to plant its own groves in order to
ensure a continuous supply. The rate of expansion of orange groves in
other areas of the country has also been slow. Area planted and
harvested for MY 2001/02 was revised upward based on official estimates.
The main citrus producing states are Veracruz, Nuevo Leon, San Luis
Potosí and Tamaulipas, which account for 73 percent of total area
planted. Tabasco, Campeche and Yucatan are relatively new compared to
Veracruz, representing a 12 percent of total area planted.

Country‑wide orange yields in MY 2002/03 are forecast to decrease to
11.2 MT/Ha, due to weather related problems. 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.

Costs of production have increased for all citrus fruit, especially for
imported inputs, such as fertilizers, pesticides and other agrochemical
products which have correspondingly increased at 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\$445/Ha), while the average cost for a more
intensively-farmed grove is about 8,500 pesos/Ha (US\$841.58) or higher.
The cost of production is higher in Nuevo Leon than in Veracruz because
of irrigation costs. Costs in Nuevo Leon range from 11,000 to 12,000
pesos/Ha (US\$1,089.10 to 1,188.11/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\$5.94) per day, but sometimes producers have to pay 80 pesos or more
(US\$7.92) per day to attract enough workers. To harvest oranges,
workers are being paid much more \-- about 200 pesos/MT (US\$19.80MT),
due to competition for workers from the *maquiladoras* and immigration
to the United States.

Grower prices at the farm gate for MY 2002/03 began in October at of 800
pesos/MT (US\$79.20/MT) for the early varieties. However, since
production this year will be lower, prices are expected to rise when the
juice industry begins to buy fruit. Transportation costs from Veracruz
to Mexico City are usually 2,500 to 3,000 pesos per 10 MT (US\$247.52 to
\$297.02 per 10 MT) for one-day delivery.

In 2001, the Mexican government announced the establishment of a
campaign against citrus tristeza virus (CTV). The main objective of this
campaign is to establish phytosanitary measures to prevent, control and
eradicate CTV and the brown citrus aphid in Mexico (see MX 1123). The
brown citrus aphid has been detected in the states of Quintana Roo and
Yucatan. But the CTV has been detected in the other citrus producing
states, like Veracruz, Sonora, San Luis Potosi, Tabasco, Nuevo Leon,
Colima, Michoacan, Morelos, Yucatan, Quintana Roo, Campeche, Nayarit,
and Baja California. According to citrus producers, citrus from the
Yucatan has to be washed, and packed in order to be transported to other
states. So far, this extra process is being paid by local producers at
approximately 80 pesos/MT (US\$7.92/MT). There is national program for
citrus reconversion wherein the government will promote the planting of
CTV-resistant root stock. However, this replanting has been slow as it
is very costly. Growers in other states 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 2002/03 is 3.2 MMT, a
decrease compared to MY 2001/02 consumption, due to expected higher
prices and a decrease in the consumer purchasing power. Final
consumption estimates, however, will depend on the final volume
purchased by the processing industry. The MY 2001/02 consumption
estimate was revised upward, based on official estimates and accessible
prices. The MY 2000/01 consumption estimate was revised upward, based on
available information. Orange prices for MY 2002/03 are expected to be
higher because of shorter supplies. During the first two weeks of
October 2002, wholesale prices of new-crop Valencia oranges from
Veracruz averaged 1.80 pesos/kg. (US\$0.18/kg). Most of the oranges in
the fresh market are destined for domestic fresh squeezed juice.

## 

# Trade

Mexican orange exports for MY 2002/03 are forecast to decrease to 17,000
MT, due to a decrease in domestic production. However, if U.S. demand is
stronger, some more fruit could be diverted for export purposes.
Although orange exports for MY 2001/02 were revised downward, this
figure still represents a good international demand. Data for MY 2000/01
remains unchanged. 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. Mexican exporters keep exploring Asian markets, such as
Hong Kong and Japan. The high quality oranges produced in the Sonora
desert (about 160,000 MT) are suitable for these markets because
shipments come from the Sonora fruit fly-free zone.

Mexican orange imports for MY 2002/03 are expected to increase slightly,
due to a shorter crop in Mexico. However, this will depend on imports
remaining at affordable prices. MY 2000/01 and 2001/02 import data were
revised upward, due to a greater demand for imported product. U.S.
orange exports to Mexico could expand significantly given the import
zero 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

There are three major wholesale markets or *Centrales de Abastos* in the
country, which account for 80 percent of total citrus fruit sold. Mexico
City\'s Central Market handles 40 percent of the sales. The two other
largest markets are located in Guadalajara and Monterrey. Mexico\'s
distribution system is unique in its mix between traditional
distribution methods (central market purchasing and delivery) and more
sophisticated methods (large regional and national distributors).

Distributors/importers are the key to the success of any imported
product since only some of the major retail and few of the major food
service chains import directly. For any U.S. company entering Mexico, it
is important to have an agent or reliable distributor, who can maintain
regular contact with buyers, interface with the government and handle
the required paperwork, and ensure that service is maintained.

For fresh horticultural products, including citrus fruits, each city has
a central wholesale market known as the *Central de Abastos*. Virtually
all of Mexico\'s horticultural and fruit production and imports move
through these markets, where they are sold in boxes. Typical buyers in
this area are large supermarket chains, street markets, hotels and
restaurants.

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 US citrus products. Despite the
excellent quality, prices are 4 to 5 times higher than Mexican products.
Some attempts have been made by US firms to enter the market, but they
have had limited success because of strategies emphasizing quality
rather than price. Another limitation for US 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 having an International Phytosanitary
Certificate, which indicates that the products were grown in fruit
fly-free areas. Negotiations are still underway for Florida Citrus.

A free trade agreement was signed between Mexico and the European Union
(EU) that went into effect 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 will
allow 30,000 MT of FCOJ under a quota with a tariff of 25 percent under
the MFN duty. Mexico has increased exports of FCOJ to Germany, the
United Kingdom and the Netherlands.

# 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. Also, Oaxaca,
Yucatan, and Tabasco in the southern part of Mexico are producing
Persian Limes.

Total production of both limes for MY 2002/03 is forecast at 1,600,000
MT, slightly higher than MY 2001/02 production, due to more acreage
coming into production. According to producers, rainfall during May/June
2002 in Michoacan and Colima for Key Limes was satisfactory. Overall
weather conditions in Veracruz for Persian Limes were drier than normal,
as rainfall was not adequate. Production for MY 2000/01 and 2001/02 were
revised downward based on recent official estimates. In general, the
growth of area planted for both limes have increased production.

Area planted to both Persian and Key Limes has increased in Mexico. Due
to the export benefits of Persian Limes, planted area for this fruit has
grown at a faster rate in Veracruz. Some producers in Veracruz have
replanted orange and grapefruit groves with Persian Limes because of
favorable international demand and prices. Also, demand of Key Limes has
increased from the domestic market. Therefore, new trees are coming into
production in Veracruz, Michoacan and Oaxaca. Approximately 25 percent
of the total area is planted with Persian Limes and 75 percent is
planted with Key Limes. Due to the excellent winter window for Key Limes
for the domestic market, planted area for this fruit is expanding in
Michoacan. According to producers, however, the domestic market is
saturated and therefore a sharp increase in the area planted would only
result in lower producer profits. Total area planted for MY 2002/03 is
forecast at 140,000 hectares. Area planted for MY 2001/02 was revised
upward based on new official estimates. Area planted and harvested for
MY 2000/01 was revised downward 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. The purpose of this interplanting is
to increase producer revenue.

Since production costs for Persian Limes in Veracruz produced for export
is higher than those for oranges, the Persian Lime trade tends to be
dominated by large producers. According to sources, Persian Lime
production costs average from 8,000 pesos/Ha to 9,500 pesos/Ha
(US\$792.00 to \$940.60/Ha) or more, due to higher prices for imported
inputs such as fertilizers, pesticides and other agrochemical products.
Well tended areas can have production costs of \$14,000 pesos/Ha
(US\$1,386.13/Ha). Transportation costs from Veracruz to Mexico City are
usually 3,500 to 4,000 pesos/truck (US\$346.53 to \$396.00 / 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\$693.07 to \$1,584.15/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 5
to 12 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\$39.60 to \$79.20/MT) for the domestic market, and 600 to 3,000
pesos/MT (US\$60.00 to \$297.00/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\$64.35 to \$257.42/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 2002/03 is forecast at
1,116,000 MT. Prices for both limes, however, began at higher levels
compared to MY 2001/02. Consumption for MY 2000/01 and 2001/02 was
revised downward based on more available data. Those Persian Limes which
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 in18-20/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 2002/03 are forecast at 245,000 MT,
a slight increase from the preceding year estimates, due to expected
higher prices compared to MY 2001/02. The current international price
for Persian Limes, however, remains low. MY 2002/03 prices for Persian
Limes in October 2002 were US\$5 to\$8/40-pound box, while in 2001
prices were about US\$8 and US\$9/40-pound box. Growers, however, are
expecting prices to rise to US\$12 to \$15 per box for December and
January 2003. Persian Limes reach on average US\$20 to \$30/ 40-pound
box when international prices are good. Exporters indicate that Brazil
is competing with Mexico for the European market. Export estimates for
MY 2001/02 were revised downward because dry weather conditions reduced
somewhat Persian Lime production. Exports for 2000/01 were revised
upward 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 2002/03 imports are forecast at 1,000 MT. Data
for MY 2000/01 remains unchanged, and data for MY 2000/01 was revised
upward based on available trade data.

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.

  ----------------- -------------------------- --------------------------
  **NAFTA TARIFF                               
  SCHEDULE** - **US                            
  TARIFF**                                     

  **YEAR**          **KEY LIMES**              **PERSIAN LIMES**

  2000              0.60¢/kg                   0.00¢/kg

  2001              0.40¢/kg                   0.00¢/kg

  2002              0.27¢/kg                   0.00¢/kg
  ----------------- -------------------------- --------------------------

# FRESH GRAPEFRUIT 

# Production

Grapefruit production for MY 2002/03 is forecast at 270,000 MT. Growers
expect production to recover from the dry weather conditions that
affected output along the Gulf of Mexico from Tabasco to Tamaulipas.
Production for MY 2001/02 was revised upward based on official
estimates, but it still reflects a lower production compared to MY
2000/01. This decrease in grapefruit production is a result of dry
weather conditions during the production cycle along the Gulf of Mexico
and the use of fewer inputs to maintain groves, due to high costs of
production. The state of Michoacan, however, enjoyed good weather
conditions and production was good and increasing. Although the groves
are still relatively new, they are entering the sixth or seventh year of
production and so are reaching their maximum-bearing potential.
Consequently, production is expected to reach 25,000 MT or more per
year. Grapefruit production estimates for MY 2000/01 were revised upward
based on official data.

There is a tendency to decrease area planted in Veracruz and increase
area in Michoacan. New planted areas in central Veracruz have been
offset by abandoned areas in other parts of the same state. Most of the
new planted areas are geared towards the European export market.
According to the industry, however, grapefruit plantings increased in
the state of Michoacan because of better general weather conditions and
a much lower cost of production. These areas are also geared towards the
export market. Campeche is also a newly-developed area with only a few
hectares of planted grapefruit compared to other states and is also
geared to the export market. Therefore, area planted for grapefruit is
forecast at 14,400 hectares for MY 2002/03 a decrease compared to MY
2001/02. It seems that Veracruz had less area devoted to grapefruit and
replanted with Persian Limes.

Area planted for MY 2001/02 was revised upward and area harvested was
revised downward, reflecting an increase in area planted in Michoacan
because of good domestic and international prices. Less area was
harvested because of the effects of the dry weather conditions. Area
planted and harvested for MY 2000/01 was revised upward based on
official data. This data reflect increases in area planted, mainly in
Michoacan and Campeche.

There are two types of grapefruit planted in Mexico: the red table
varieties produced in Tabasco, Campeche, Michoacan, Nuevo Leon and
Veracruz 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 are increasing because of the export market preferences.
The state of Nuevo Leon has a certified forced-hot-air chamber in
Montemorelos, but due to its high operation costs, it has been used very
little as an alternative quarantine treatment. So, exports through this
method are not expected to grow.

According to growers, the MY 2002/03 forecast for grapefruit destined
for processing will be approximately 37,000 MT. Grapefruit is used for
peeled slices or juice production. Grapefruit for processing purposes
for MY 2000/01 and 2001/02 was revised upward based on available
information.

Overall average yields for MY 2002/03 are forecast at 20.7 MT/Ha.
Average yields for MY 2001/02 are estimated at 19.8 MT/Ha because of the
dry weather conditions that affected several producing states. An
overall normal yield for grapefruit is approximately 23 MT/Ha. Veracruz
accounts for about 64 percent of Mexican grapefruit production and has
the highest yield in the country with 20 to 26 MT/Ha. Nuevo Leon follows
with yields of 18 to 20 MT/Ha. Michoacan has lower yields \-- between 10
to 14 MT/Ha., but these yields are expected to increase. In other
states, yields vary from 10 to 15 MT/Ha. Grower prices for MY 2002/03 in
Veracruz began in October 2002 at approximately 700 pesos/MT
(US\$69.30/MT) for the red varieties, however, prices tend to drop by
November. Grower prices for Nuevo Leon began on average at 1,000
pesos/MT (US\$99.00/MT). Since Michoacan has developed areas with red
varieties that can be harvested in June/July, grower prices were higher
at approximately 2,000 to 3,000 pesos/MT (US\$198.00 to \$316.63/MT).

# Consumption

Grapefruit consumption for MY 2002/03 is forecast at 238,000 MT. Demand
for grapefruit has increased in the past years, due to the preference of
consumers for low calorie foods, but it decreases if prices increase.
Consumption estimates for MY 2000/01 and 2001/02 were revised upward
based on available information. Wholesale prices for October 2002 in
Mexico City were approximately 2.40 pesos/kg (US\$0.23/kg), an increase
compared to prices of 2.00 pesos/kg (US\$0.21/kg) in October 2001.
Retail prices averaged 3.50 pesos/kg (US\$0.35/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 command higher prices in
the domestic market.

# Trade

Grapefruit exports for MY 2002/03 are forecast to reach 4,000 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 2001/02 were
revised downward because the dry weather affected fruit quality, which
did not comply with European standards. Export estimates for MY 2000/01
were revised upward based on trade data and a larger demand from the
European markets. However, any substantial increase in grapefruit
exports, will depend upon advances in the phytosanitary area and
technological practices.

According to sources, most of the imported grapefruit from the U.S. is
further processed for re-export to U.S. and European markets. Imports
are expected to increase to 9,000 MT for MY 2002/03, but this will
depend on demand from the export markets. Data for imported grapefruit
for MY 2000/01 and 2001/02 was revised downward, due to higher prices
and less demand. While likely to expand slightly, U.S. grapefruit
exports to Mexico will still be relatively small.

# FROZEN CONCENTRATE ORANGE JUICE

# Production

Frozen concentrate orange juice (FCOJ) production for MY 2003
(January-December) is forecast at 36,000 MT, a decrease compared to MY
2002 production because of lower orange production and probable higher
prices for fresh oranges. Juice production depends heavily on the
international price of FCOJ. The industry is expecting prices to rise at
least to US\$1.0/lb for CY 2003. The international price for FCOJ
contracts for CY 2002 deliveries were at US\$0.80 to US\$0.90/lb. The
FCOJ production estimate for MY 2002 was revised upward based on
industry information. According to the industry, higher international
prices encouraged the industry to produce more juice compared to MY
2001. Data for MY 2000 remains unchanged. The industry is expecting to
buy fruit for 2003 at higher prices than it did in MY 2002. The industry
bought fresh fruit on average from 400 to 550 pesos/MT (US\$43.90 to
\$60.37/MT) during February/March 2002, but if the fresh market receives
higher prices due to shorter supplies, the processing industry will have
to pay higher prices. Fresh market prices for oranges for processing may
go as high as 600 to 700 pesos/MT (US\$59.40 - \$69.30/MT) by the end of
the season.

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 of ownership. Of the 22 Mexican juice plants previously in
operation in, only 7 are currently running.

# Consumption

In general, the industry does not expect domestic consumption to
increase dramatically because of the availability of fresh oranges in
the domestic market and a lack of demand. The majority of Mexican
consumers prefer and demand fresh squeezed juice instead of processed
orange juice. The industry indicates that consumption for MY 2003 is
expected to remain similar to that of MY 2002 because of an expected
lower consumer purchasing power. Consumption estimates for MY 2001 and
2002 were revised upward, due to the introduction of more
orange-flavored beverages in the market. 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. Ending stocks for MY 2001 were revised upward.

# Trade

Exports of FCOJ for MY 2003 are forecast to decrease to approximately
33,350 MT. Exports are expected to be lower because of a shorter
availability of domestic oranges for processing. According to industry
sources, if production is as low as expected, the U.S. quota might not
be filled. Exports for MY 2002 were revised upward, based on industry
information and better international demand. 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.

FCOJ imports for MY 2000 and 2001 were revised upward according to
available data. According to the industry, most imports are for mixing
purposes. FCOJ imports for MY 2003 are forecast to be similar to those
of MY 2002. With a good domestic supply of FCOJ and 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
over 15 years. 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.