Voluntary Report - public distribution

**Date:** 12/23/2005

**GAIN Report Number:** MX5111

M

**Mexico**

**Agricultural Situation**

**Weekly Highlights and Hot Bites, Issue #45**

**2005**

Approved by:

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

U.S. Embassy

Prepared by:

Luis Chavez, Dulce Flores, Benjamin Juarez, and Jeff Nawn

Report Highlights:

-   **MEXICO REALIZES AGRICULTURAL TRADE SURPLUS WITH THE U.S.**

-   **NATIONAL FARMERS CONFEDERATION SPEAKS OUT AGAINST HR 4437**

-   **Top Food Brands Refuse To Report Use Of GMO's**

-   **From Tobacco To Bananas**

-   **SAGARPA To Help Drought-Affected Growers**

-   **SAGARPA CUTS Red Tape**

-   **Tomato Prices INCReASE 52 Percent In One Week**

-   **RURAL AND URBAN INCOME GAP REDUCED**

-   **GOM SUGAR MILLS TO EXPORT 101,451 TONS UNDER NAFTA TRQ**

-   **MIGRATION PREVENTS SERIOUS CRISIS IN MEXICO**

-   **SAGARPA: BORDER WALL WILL PRIMARILY AFFECT THE UNITED STATES**

-   **WTO MADE MODEST PROGRESS ON FARM SUBSIDIES**

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Mexico \[MX1\]

\[MX\]

MEXICO REALIZES AGRICULTURAL TRADE SURPLUS WITH THE U.S.

According to the Secretariat of Agriculture, Mexico realized a \$15
million agricultural trade surplus with the U.S. during the first nine
months of 2005. During this period of time Mexico exported \$6.89
million in food and agricultural products to the U.S. (Source: El
Universal; 12/20/2005)

**NATIONAL FARMERS CONFEDERATION SPEAKS OUT AGAINST HR 4437**

Heladio Ramirez Lopez, president of the National "Campesino"
Confederation (CNC), demanded that President Fox vehemently defend the
rights of Mexicans by persuading the U.S. Senate to reject the Border
Protection, Antiterrorism, and Illegal Immigration Control Act of 2005
(H.R. 4437), which was recently approved by the U.S. House of
Representatives. The proposed law would criminalize over 11 million
undocumented immigrants living in the U.S., and punish U.S. citizens and
permanent residents who come into contact with them. Because of the
inability of the Fox administration to reach an immigration agreement
with the United States, Ramirez-Lopez proposed the creation of an
attorney\'s office for migrant\'s defense, and to strengthen the
Institute of Mexicans Abroad. He added, \"If the U.S. is not going to
revise the agricultural chapters of NAFTA, they will have to accept the
surge of 15 million Mexican countrymen.\" (Source: La Jornada;
12/19/2005)

Top Food Brands Refuse To Report Use Of GMO's

Greenpeace Mexico accused several large food companies such as
Kellogg's, Maseca, Bimbo, Danone, Lala, Nestle, Herdez, and La Costeña,
of refusing to inform consumers if they currently include GMO's in their
products. Greenpeace issued a "red & green" company report, where
companies are labeled green if they demonstrate and guarantee that they
do not use GMO's in their products, or labeled red if they refuse to
provide that information. According to Greenpeace, this is an effort to
warn and educate consumers about GMO ingredients. (EL FINANCIERO, DEC.
12)

From Tobacco To Bananas

Tobacco growers from the Mexican state of Nayarit are currently facing
tough times. International competition from Brazil, Argentina, and
Chile, and the adoption of restrictive laws on cigarette consumption,
has hit the industry hard. In the past ten years the number of Mexican
tobacco farmers has fallen from over 12,000 to fewer than 4,000.
Furthermore, during that period of time, production costs have risen
34%, while cigarette prices have risen only 5%. A lack of infrastructure
and credit has forced growers to switch production to other products
such as dry beans, sorghum, vegetables, and bananas. (EL NORTE, DEC. 12)

SAGARPA To Help Drought-Affected Growers

Mexico's Ministry of Agriculture recently announced the delivery of
natural disaster assistance to communities in the states of Durango and
Zacatecas that have been affected by drought. In addition to monetary
aid, SAGARPA sent certified seeds to farmers in an attempt to compensate
for the devastation suffered in dry bean, corn, and oat production
areas. With the first delivery of \$100 million pesos (U.S. \$9.25
million) to the state of Durango, the GOM hopes to help cattle growers
avoid further losses. (LA PRENSA, DEC. 13)

SAGARPA CUTS Red Tape

Mexico's Ministry of Agriculture announced that the wait times for plant
and animal health certificates have been reduced. The zoo-sanitary
export certificate is now issued in 20 minutes, rather than 48 hours,
and phytosanitary certificates are now issued in 24 hours. SAGARPA has
been working to streamline their bureaucracy and reduce by at least 50%
the wait-time for the delivery of all of their services. (DIARIOMONITOR,
DEC. 14)

Tomato Prices INCReASE 52 Percent In One Week

According to Mexico's National Market Information Service (SNIIM), in
the past week tomato prices in wholesale markets have risen 52% for the
red tomatoes, and 18% for the saladette (Roma) tomatoes. SNIIM forecasts
that due to tight supplies, and strong demand, prices will continue to
increase in the coming weeks. The agency's report states that lower than
expected supply is due to heavy rains in the Mexican state of Sinaloa,
the main tomato producer state, and to several diseases which have
affected production. (EL NORTE, DEC. 14)

RURAL AND URBAN INCOME GAP REDUCED

Juan Galarza, director of the Agrifood and Fisheries Statistics and
Information Service (SIAP), stated that the average yearly income of a
rural Mexican family has increased from \$10,526 pesos (U.S. \$ 970) to
\$14,053 pesos (U.S. \$ 1,295) in the past five years, thus reducing
extreme poverty by 10% in rural areas. Galarza also commented that in
1998, 50% of the rural population suffered some level of poverty,
whereas today that number has been reduced to 30%. The reasons for the
increase in rural income include: additional income from urban family
members, remittances from immigrants in the United States, and GOM
assistance programs such as Procampo and Oportunidades. "Another
important fact to point out is that over the past years food consumption
habits have shifted to products with higher protein, vitamin, and
mineral content," Galarza concluded. (EL ECONOMISTA, DEC. 15)

GOM SUGAR MILLS TO EXPORT 101,451 TONS UNDER NAFTA TRQ

FICO, the marketing and trading arm for the 23 government run sugar
mills, recently auctioned off the NAFTA U.S. sugar TRQ. E.D.& F. MAN
successfully purchased the 101,451 MT allocation at a price of U.S.
\$441.00 per ton. The firm will be responsible for the logistics of
transporting the sugar to the U.S. (Source: El Financiero, El Universal,
Excelsior 12/19/05)

## MIGRATION PREVENTS SERIOUS CRISIS IN MEXICO

According to a Wells Fargo Bank report, one of the reasons why the
Mexican economy has been able to grow at rates of 3 percent, and still
manage to avoid a serious social crisis, is the fact that a large
percentage of its population has been able to migrate to the U.S. to
look for jobs and opportunities. Remittances from these workers have
served as an "escape valve" that continues to delay the "day of
reckoning." This day of reckoning will come when the country's political
system finally decides to implement unavoidable reforms that will help
the country recover some of its lost competitiveness in world markets,
stated the Wells Fargo report. The report also states that Mexican
economic growth continues to show characteristics of a fully developed
economy rather than an emerging or less developed economy, with growth
rates that remain too low to satisfy the needs of a growing population,
but enough to avoid an increase in social demands. \"As we have argued
on a number of occasions, in order for economic growth in the country to
be 'efficient', in the sense of being able to absorb the growth of its
labor force, the country has to grow by at least 5 percent per year,\"
the Bank's report states. (Source: El Financiero; 12/21/2005)

# SAGARPA: BORDER WALL WILL PRIMARILY AFFECT THE UNITED STATES 

The Secretary of Agriculture, Francisco Mayorga, stated that Americans
would be more affected by the erection of a wall along the U.S.-Mexico
border than Mexicans. His reasoning was that if the U.S. closes the
border to the entry of illegal Mexican immigrants, the U.S. food
production and processing industry will suffer tremendously. The U.S.
agribusiness industry's inability to produce will then force U.S.
consumers to buy food and agricultural products from Mexico. The
Secretary remarked that Mexico should view that wall as an opportunity
to generate employment, increase production, and gain market share in
foreign markets. (Source: La Jornada; 12/22/2005)

**WTO MADE MODEST PROGRESS ON FARM SUBSIDIES**

Mexico has emerged from recent WTO talks in Hong Kong with a renewed
sense of urgency to focus on building the nation's competitive edge
internationally, said Economy Secretary Sergio Garcia de Alba. In a
press conference, Garcia de Alba stated that an agreement reached at the
meeting - in which wealthy nations will eliminate export subsidies for
agricultural products by 2013 - represents \"modest progress\" for the
WTO. At the same press conference, Agriculture Secretary Francisco
Mayorga stated that this agreement will not affect federal aid given to
Mexican farmers. Garcia de Alba praised the G20 group, comprised of
developing nations including Mexico, Brazil, and India, saying it was
critical to pressuring wealthy countries to accept the subsidy
reductions. The controversial subject of \"sensitive products,\" or
goods that nations want to exempt from free trade rules due to special
cultural or economic significance, was left pending. The ongoing
negotiations in 2006 will define which products will be classified as
sensitive. Mexico hopes to receive sensitive status for its milk, beans,
corn, and sugar. Mayorga said Mexico must continue to brace for
competition against countries where costs of production are even lower.
\"Just as is happening with China, we could see the same thing with
India, Pakistan, Bangladesh, or Vietnam,\" he said, referring to the
increased competition Mexican exports have faced in recent years in the
critical U.S. market. Mayorga also stated that rapidly developing
countries could knock Mexico out of markets where it has long been
secure, and gave as an example Vietnam's growth as a coffee exporter,
which has displaced Mexico in the international coffee markets. Garcia
de Alba also emphasized the importance of technical and scientific
development in Mexico so it can produce manufactured goods or packaged
foods for export, as well as fruits and vegetables. (Source: El
Universal; 12/22/2005)

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+----------+-----------------------------------------------+----------+
| # NUMBER | # TITLE                                       | # DATE   |
+----------+-----------------------------------------------+----------+
| MX5110   | Weekly Highlights and Hot Bites, Issue #44    | 12/16/05 |
+----------+-----------------------------------------------+----------+
| MX5109   | Weekly Highlights and Hot Bites, Issue #43    | 12/9/05  |
+----------+-----------------------------------------------+----------+
| MX5108   | Weekly Highlights and Hot Bites, Issue #42    | 12/2/05  |
+----------+-----------------------------------------------+----------+
| MX5107   | Annual Avocado Report                         | 11/29/05 |
+----------+-----------------------------------------------+----------+
| MX5106   | Weekly Highlights and Hot Bites, Issue #41    | 11/28/05 |
+----------+-----------------------------------------------+----------+
| MX5105   | Annual Citrus Report                          | 11/24/05 |
+----------+-----------------------------------------------+----------+