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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 20-F

                                   ----------

                                  ANNUAL REPORT
                       PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2004

                        Commission File Number: 333-7480

                        INDUSTRIAS BACHOCO, S.A. DE C.V.
             (Exact name of Registrant as specified in its charter)

                               BACHOCO INDUSTRIES
                 (Translation of Registrant's name into English)

                            THE UNITED MEXICAN STATES
                 (Jurisdiction of incorporation or organization)

                           Avenida Tecnologico No. 401
                          Ciudad Industrial C.P. 38010
                           Celaya, Guanajuato, Mexico
                    (Address of principal executive offices)

 Securities registered or to be registered pursuant to Section 12(b) of the Act:

         Title of each class           Name of each exchange on which registered
------------------------------------   -----------------------------------------
  American Depositary Shares, each             New York Stock Exchange
  representing six Units, each Unit
consisting of one Series B Share and
       one Series L Share.

Securities Registered or to be Registered pursuant to Section 12(g) of the Act:
None.

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None.

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:

                   Series B Capital Stock          450,000,000 Shares
                   Series L Capital Stock          150,000,000 Shares

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

Indicate by check mark which financial statement item the registrant has elected
to follow:

                             Item 17 [ ] Item 18 [X]

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<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                               PAGE
                                                                                               ----
<S>                                                                                              <C>
PART I

  ITEM 1.      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.......................       1
  ITEM 2.      OFFER STATISTICS AND EXPECTED TIMETABLE.....................................       1
  ITEM 3.      KEY INFORMATION.............................................................       1
  ITEM 4.      INFORMATION ON THE COMPANY..................................................      10
  ITEM 5.      OPERATING AND FINANCIAL REVIEW AND PROSPECTS................................      26
  ITEM 6.      DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES..................................      40
  ITEM 7.      MAJOR STOCKHOLDERS AND RELATED PARTY TRANSACTIONS...........................      47
  ITEM 8.      FINANCIAL INFORMATION.......................................................      49
  ITEM 9.      THE OFFER AND LISTING.......................................................      51
  ITEM 10.     ADDITIONAL INFORMATION......................................................      54
  ITEM 11.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..................      70
  ITEM 12.     DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES......................      72

PART II

  ITEM 13.     DEFAULT, DIVIDEND, ARREARAGES AND DELINQUENCIES.............................      72
  ITEM 14.     MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS      72
  ITEM 15.     CONTROLS AND PROCEDURES.....................................................      72
  ITEM 16.     [RESERVED]..................................................................      73
  ITEM 16A.    AUDIT COMMITTEE FINANCIAL EXPERT............................................      73
  ITEM 16B.    CODE OF ETHICS..............................................................      73
  ITEM 16C.    PRINCIPAL ACCOUNTANT FEES AND SERVICES......................................      73
  ITEM 16D.    EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES..................      74
  ITEM 16E.    PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS......      74

PART III

  ITEM 17.     FINANCIAL STATEMENTS........................................................      74
  ITEM 18.     FINANCIAL STATEMENTS........................................................      74
  ITEM 19.     EXHIBITS....................................................................      74
  INDEX OF EXHIBITS........................................................................      74
</TABLE>

                                        i
<PAGE>

        Industrias Bachoco, S.A. de C.V. is a holding company with no operations
other than holding the stock of its subsidiaries. Its principal operating
subsidiary is Bachoco, S.A. de C.V. ("BSACV"), which owns the principal
operating assets of Industrias Bachoco, S.A. de C.V. and accounted for 92.4% of
consolidated total assets on December 31, 2004. References herein to "Bachoco,"
"we," "us," "our", "its" or the "Company" are, unless the context requires
otherwise, to Industrias Bachoco, S.A. de C.V. and its consolidated subsidiaries
as a whole.

        We are incorporated under the laws of the United Mexican States
("Mexico"), and all of our operations are in Mexico. Our principal executive
offices are located at Avenida Tecnologico No. 401, Ciudad Industrial C.P.
38010, Celaya, Guanajuato, Mexico, and our telephone number is (011) (52) (461)
618-3500.

                           PRESENTATION OF INFORMATION

        We publish our financial statements in Mexican pesos and present our
financial statements in accordance with generally accepted accounting principles
in Mexico ("Mexican GAAP"). Mexican GAAP requires restatement of all financial
statements to constant pesos as of the date of the most recent balance sheet
presented. Except as otherwise indicated, all data in both the financial
statements included below in Item 18 (which together with the attached notes
constitute the "consolidated financial statements") and the selected financial
information included throughout this Form 20-F (this "Annual Report") have been
restated in constant pesos as of December 31, 2004.

        Mexican GAAP differs in certain respects from generally accepted
accounting principles in the United States ("U.S. GAAP"). For a discussion of
certain significant differences between Mexican GAAP and U.S. GAAP as they
relate to us, together with a reconciliation of operating income, net income and
total stockholders' equity to U.S. GAAP, and a condensed statement of cash flows
under U.S. GAAP, see Note 17 to the consolidated financial statements. The
effect of price-level restatement under Mexican GAAP has not been reversed in
the reconciliation to U.S. GAAP. See Note 17 to the consolidated financial
statements.

         References herein to "U.S. dollars," "U.S.$" or "$" are to the lawful
currency of the United States. References herein to "pesos" or "Ps." are to the
lawful currency of Mexico. This Annual Report contains translations of certain
peso amounts into U.S. dollars at specified rates solely for the convenience of
the reader. Unless otherwise indicated, such U.S. dollar amounts have been
translated from pesos at an exchange rate of Ps.11.154 to U.S.$1.00, the
exchange rate on December 31, 2004.

        As used herein, the term "tonnes" refers to metric tons of 1,000
kilograms (equal to 2,204.6 pounds) and the term "billion" refers to one
thousand million (1,000,000,000). One square meter is equivalent to 10.764
square feet.

                                   MARKET DATA

        This Annual Report contains certain statistical information regarding
the Mexican chicken, beef, egg, feed and swine markets and our market share. We
have obtained this information from a variety of sources, including the
producers' associations Union Nacional de Avicultores ("UNA"); Consejo Nacional
Agropecuario ("CNA") and Consejo Mexicano de Porcicultura ("CMP"), as well as
Banco de Mexico ("Mexican Central Bank"); Secretaria de Agricultura, Ganaderia,
Desarrollo Rural, Pesca y Alimentos ("Ministry of Agriculture, Livestock, Rural
Development, Fishing and Food" or "SAGARPA") and publications of the U.S.
Department of Agriculture ("USDA"). The producers' associations rely principally
on data provided by their members. Information for which no source is cited was
prepared by us on the basis of our knowledge of the Mexican chicken, egg, feed
and swine markets and the wide variety of information available regarding these
markets. The methodology and terminology used by different sources are not
always consistent, and data from different sources are not readily comparable.

                                       ii
<PAGE>

                           FORWARD-LOOKING STATEMENTS

        We may from time to time make written or oral forward-looking statements
in our periodic reports to the Securities and Exchange Commission on Forms 20-F
and 6-K, in our annual report to stockholders, in offering circulars and
prospectuses, in press releases and other written materials and in oral
statements made by one of our officers, directors or employees to analysts,
institutional investors, representatives of the media and others.

        Examples of such forward-looking statements include, but are not limited
to: (i) projections of revenues, income (or loss), earnings (or loss) per share,
capital expenditures, dividends, capital structure or other financial items or
ratios; (ii) statements of our plans, objectives or goals or those of our
management, including those relating to new contracts; (iii) statements about
future economic performance and (iv) statements of assumptions underlying such
statements. Words such as "believe," "anticipate," "plan," "expect," "intend,"
"target," "estimate," "project," "predict," "forecast," "guideline," "should"
and similar expressions are intended to identify forward-looking statements but
are not the exclusive means of identifying such statements.

        Forward-looking statements involve inherent risks and uncertainties, and
a number of unexpected changes could cause actual results to deviate from our
plans, objectives, expectations, estimates and intentions. We recognize that the
accuracy of our predictions and our ability to follow through on our intentions
depend on factors beyond our control. The potential risks are many and varied,
but include unexpected changes in to:

        .   economic, weather and political conditions;

        .   raw material prices;

        .   competitive conditions; and

        .   demand for chicken, eggs, feed and swine.

                                       iii
<PAGE>

                                     PART I

ITEM 1.         IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

                Not Applicable.

ITEM 2.         OFFER STATISTICS AND EXPECTED TIMETABLE

                Not Applicable.

ITEM 3.         KEY INFORMATION

SELECTED FINANCIAL DATA

        The information set forth below is derived from Bachoco's consolidated
financial statements, which are included in Item 18. In this disclosure, we
explain the figures and year-to-year changes in our consolidated financial
statements.

        In preparing the consolidated financial statements, we followed Mexican
GAAP, which differs in certain respects from U.S. GAAP. Note 17 to the
consolidated financial statements provides a description of the main differences
between Mexican GAAP and U.S. GAAP as they relate to us; a reconciliation to
U.S. GAAP of total stockholders' equity, net income and operating income, and a
condensed statement of cash flows under U.S. GAAP as of December 31, 2003 and
2004 and for the years ended December 31, 2002, 2003 and 2004. Our financial
statements were prepared pursuant to Bulletin B-10, as amended, and Bulletin
B-12, issued by the Mexican Institute of Public Accountants, which became
effective on January 1, 1990.

        Bulletin B-10 is designed to account for the effects of inflation on
financial disclosures by requiring us:

        .   restate non-monetary assets at current replacement cost or by using
            the Mexican National Consumer Price Index ("NCPI");

        .   restate non-monetary liabilities using the NCPI;

        .   restate the components of stockholders' equity using the NCPI; and

        .   record gains or losses in purchasing power that result from the
            monetary liabilities or assets that we hold.

Bulletin B-10 also requires restatement of all financial statements in constant
pesos as of the date of the most recent balance sheet presented. Except as
otherwise indicated, we have restated all financial information taken from the
financial statements or derived from them, as explained below, in constant pesos
as of December 31, 2004. Bulletin B-12 requires that the statement of changes in
financial position reconcile the differences between the restated historical
balance sheet and the current balance sheet. The effects of price-level
restatement under Mexican GAAP have not been reversed in the reconciliation to
U.S. GAAP. See Note 17 to the consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>
                                                  AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                           ------------------------------------------------------
                                                 2000               2001               2002
                                           ---------------    ---------------    ----------------
                                                     (millions of constant pesos as of
                                                            December 31, 2004)(1)
<S>                                        <C>                <C>                <C>
INCOME STATEMENT DATA

Mexican GAAP:
Net revenues ...........................   Ps.    11,090.0    Ps.    11,158.6    Ps.     11,328.8
  Cost of sales ........................           7,922.4            8,167.9             8,403.7
                                           ---------------    ---------------    ----------------
  Gross profit .........................           3,167.5            2,990.7             2,925.0
  Operating income .....................           1,809.3            1,492.4             1,358.4
  Comprehensive financing income (loss)              163.7              127.7                15.7

  Majority Net income ..................           1,478.0            1,249.4             1,619.3
  Majority Net income per Unit(3) ......              4.97               4.19                5.43

  Majority Net income per ADS(4) .......              29.8               25.1                32.6
  Dividends per Unit(5) ................              0.66               1.25                1.02
  Weighted average Units outstanding
   (thousands) .........................           296,124            297,454             297,898
U.S. GAAP:
Net revenues ...........................   Ps.    11,090.0    Ps.    11,158.6    Ps.     11,328.8
  Cost of sales ........................           7,922.4            8,167.9             8,403.7
                                           ---------------    ---------------    ----------------
  Gross profit .........................           3,167.5            2,990.7             2,925.0
  Operating income .....................           1,810.0            1,490.5             1,372.8
  Comprehensive financing income (loss)              129.6              100.4                12.0

  Majority Net income ..................   Ps.     1,507.3    Ps.     1,265.0    Ps.      1,638.1
  Majority Net income per Unit(3) ......               5.1               4.25                5.50

  Majority Net income per ADS(4) .......              30.5               25.5                33.0
  Dividends per Unit(5) ................              0.66               1.25                1.02

STATEMENT OF FINANCIAL POSITION DATA
Mexican GAAP:
  Cash and cash equivalents ............   Ps.     1,442.0    Ps.     1,352.2    Ps.      1,855.0
  Property, plant and equipment ........           7,576.0            7,858.6             7,800.6
  Total assets .........................          11,621.4           12,172.9            12,648.5
  Short-term debt(6) ...................             199.8              171.8               128.7
  Long-term debt .......................             717.3              180.0                80.2
  Stockholders' equity .................           8,448.2            9,131.4            10,362.1
U.S. GAAP:
  Cash and cash equivalents ............   Ps.     1,442.0    Ps.     1,352.2    Ps.      1,855.0
  Property, plant and equipment ........           7,583.1            7,893.1             7,837.3
  Total assets .........................   Ps.    11,628.7    Ps.    12,200.0    Ps.     12,702.6
  Short-term debt(6) ...................             199.8              171.8               128.7
  Long-term debt .......................             717.3              180.0                80.2
  Stockholders' equity .................           8,410.2            9,112.4            10,365.4

SELECTED OPERATING DATA
  Sales volume (thousands of tonnes):

    Chicken ............................             601.1              662.2               665.4
    Eggs ...............................              70.0               85.6               131.7
    Swine ..............................               9.0                9.0                 9.0
    Feed ...............................             292.4              346.0               324.7
  Gross margin(%) ......................              28.6%              26.8%               25.8%
  Operating margin(%) ..................              16.3%              13.4%               12.0%
  Net margin(%) ........................              13.3%              11.2%               14.3%
  Total employees ......................            16,396             18,482              18,306

<CAPTION>
                                                  AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                           ------------------------------------------------------
                                                2003                2004             2004(2)
                                           ---------------    ---------------    ----------------
                                            (millions of constant pesos as        (millions of
                                                of December 31, 2004)(1)         U.S. dollars)(2)
<S>                                        <C>                <C>                <C>
INCOME STATEMENT DATA

Mexican GAAP:
Net revenues ...........................   Ps.    11,309.3    Ps.    13,299.4    U.S.$    1,192.3
  Cost of sales ........................           9,200.0           10,785.7               967.0
                                           ---------------    ---------------    ----------------
  Gross profit .........................           2,109.3            2,513.7               225.4
  Operating income .....................             454.6              853.7                76.5
  Comprehensive financing income (loss)              131.6              -71.5                -6.4

  Majority Net income ..................             567.5              706.6                63.4
  Majority Net income per Unit(3) ......              1.88               2.34                0.21

  Majority Net income per ADS(4) .......              11.3               14.0                1.26
  Dividends per Unit(5) ................              1.07               0.82                0.07
  Weighted average Units outstanding
   (thousands) .........................           299,369            299,630             299,630
U.S. GAAP: .............................                                                        .
Net revenues ...........................   Ps.    11,331.9    Ps.    13,320.6    U.S.$    1,194.2
  Cost of sales ........................           9,200.0           10,785.7               967.0
                                           ---------------    ---------------    ----------------
  Gross profit .........................           2,131.9            2,534.9               227.2
  Operating income .....................             491.3              887.2                79.5
  Comprehensive financing income (loss)              122.4              -63.5                -5.7

  Majority Net income ..................   Ps.       529.2    Ps.       740.3    U.S.$       66.4
  Majority Net income per Unit(3) ......              1.77               2.47                0.22

  Majority Net income per ADS(4) .......              10.6               14.8                1.33
  Dividends per Unit(5) ................              1.07               0.82                0.07

STATEMENT OF FINANCIAL POSITION DATA
Mexican GAAP:

  Cash and cash equivalents ............   Ps.     1,650.7    Ps.     2,338.1    U.S.$      209.6
  Property, plant and equipment ........           8,210.0            8,228.0               737.7
  Total assets .........................          13,048.7           13,436.9             1,204.7
  Short-term debt(6) ...................              61.1               99.7                 8.9
  Long-term debt .......................              97.7               72.5                 6.5
  Stockholders' equity .................          10,582.0           10,875.5               975.0
U.S. GAAP:
  Cash and cash equivalents ............   Ps.     1,650.7    Ps.     2,338.1    U.S.$      209.6
  Property, plant and equipment ........           8,254.2            8,278.4               742.2
  Total assets .........................   Ps.    13,066.0    Ps.    13,499.1             1,210.3
  Short-term debt(6) ...................              61.1               99.7                 8.9
  Long-term debt .......................              97.7               72.5                 6.5
  Stockholders' equity .................          10,552.9           10,886.3               976.0

SELECTED OPERATING DATA
  Sales volume (thousands of tonnes):

    Chicken ............................             655.4              733.0
    Eggs ...............................             132.1             138.08
    Swine ..............................               8.5               9.07
    Feed ...............................             316.2              320.7
  Gross margin(%) ......................              18.7%              18.9%
  Operating margin(%) ..................               4.0%               6.4%
  Net margin(%) ........................               5.0%               5.3%
  Total employees ......................            18,495             18,896
</TABLE>

(1)  Except per Unit and per ADS amounts and operating data.
(2)  Peso amounts have been translated into U.S. dollars, solely for the
     convenience of the reader, at the rate of Ps.11.154 per U.S. dollar.
(3)  Net income per Unit has been computed based on the weighted average number
     of common shares outstanding.
(4)  Net income per ADS has been computed by multiplying net income per Unit by
     six, to reflect the ratio of six Units per ADS.
(5)  Dividends per Unit has been computed by dividing the total amount of
     dividends paid (in constant pesos as of December 31, 2004) by the weighted
     average units outstanding.
(6)  Includes notes payable to banks and current portion of long-term debt.

                                        2
<PAGE>

EXCHANGE RATES

        After the events of September 11th, the volatility of the peso
increased. In November and December 2001, however, the peso's volatility
subsided and the peso appreciated against the U.S. dollar.

        The Mexican peso remained stable during the first four months of 2002.
Its volatility increased, however, during the rest of the year. Growth in the
Mexican economy was sluggish in 2002 and the beginning of 2003, and the peso
depreciated by 12.2% against the U.S. dollar between December 31, 2001 and
December 31, 2002.

        The Mexican peso showed high levels of volatility during the first four
months of 2003; it appreciated and remained stable at the middle of the year and
in the last four months of the year the Mexican peso increased in its
volatility. Overall, the peso declined in 2003.

        In 2004, the Mexican peso showed volatility for the first four months of
the year with a general trend to depreciate with respect to the U.S. dollar; in
the following months the Mexican peso fluctuated around the same level, and
finally showed a general trend to appreciate with respect to the U.S. dollar,
mainly in the last two months of the year. At the end of 2004, it finished
stronger compared with respect to the end of 2003.

        We cannot assure you that the Mexican government will maintain its
current strategies to the peso, or that the value of the peso will not fluctuate
significantly in the future.

        The following table sets forth for the periods indicated the high, low,
average and period-end exchange rates for the purchase and sale of U.S. dollars
(presented in each case as the average between such purchase and sale rates).

<TABLE>
<CAPTION>
                                                         EXCHANGE RATE(1)
                                                 (in current pesos per U.S. dollar)
                                         -----------------------------------------------
          YEAR ENDED DECEMBER 31,           HIGH          LOW      AVERAGE(2)   YEAR END
          ----------------------------   ----------   ----------   ----------   --------
          <S>                                 <C>          <C>          <C>        <C>
          2000 ....................           10.09         9.18         9.47       9.62
          2001 ....................            9.97         8.95         9.33       9.16
          2002 ....................           10.43         9.00         9.66      10.43
          2003 ....................           11.41        10.11        10.79      11.24
          2004 ....................           11.64        10.81        11.29      11.15
</TABLE>

          (1) The exchange rates are the noon buying rates in New York City for
              cable transfers in pesos as certified for customs purposes by the
              Federal Reserve Bank of New York (the "noon buying rate").
          (2) Average of month-end rates for each period shown.

                                             EXCHANGE RATE(1)
                                          (in current pesos per
                                              U.S. dollar)
                                         -----------------------
          PERIOD                            HIGH          LOW
          ----------------------------   ----------   ----------
          November 2004 ...........           11.53        11.24
          December 2004 ...........           11.33        11.11
          January 2005 ............           11.41        11.17
          February 2005 ...........           11.21        11.04
          March 2005 ..............           11.33        10.98
          April 2005 ..............           11.23        11.04
          May 2005 ................           11.03        10.89

          ----------
          (1) The exchange rates are the noon buying rates in New York City for
              cable transfers in pesos as certified for customs purposes by the
              Federal Reserve Bank of New York.

                                        3
<PAGE>

RISK FACTORS

RISKS RELATING TO MEXICO, OTHER EMERGING MARKET COUNTRIES AND THE U.S. ECONOMY

        Mexico has experienced adverse economic conditions

        Mexico has experienced a prolonged period of slow growth since 2001,
primarily as a result of the downturn in the U.S. economy. In 2002, Mexico's
gross domestic product, or GDP, increased by 0.9% and the inflation rate was
5.7%. In 2003, GDP increased by 1.3% and the inflation rate was 3.98%. In 2004,
Mexico's domestic product improved and increased by 4.4% and the inflation rate
was 5.19%. For 2005, the Mexican government has estimated that GDP growth will
be 4.0% and the inflation rate will be between 3.0% and 4.0%, though these
estimates may not prove to be accurate.

        If the Mexican economy falls into a recession or if inflation and
interest rates increase significantly, consumers may find it difficult to pay
for the products we offer. This and other effects of recession or increased
inflation and interest rates could have serious adverse consequences on our
business, financial condition and results of operations.

        Depreciation or fluctuation of the peso relative to the U.S. dollar
        could adversely affect our financial condition and results of operations

        The single largest component of our cost of sales, our feed, is
comprised partially of ingredients we purchase in the United States, where
prices are denominated in U.S. dollars. In addition, the prices of ingredients
we purchase in Mexico may be influenced by U.S. commodity markets. Therefore,
should the peso fall relative to the U.S. dollar, both the cost of our
operations and our debt payments would increase. Any future depreciation or
devaluation of the peso may result in further net foreign exchange losses.

        In 2004, the Mexican peso appreciated with respect to the U.S. dollar by
0.8% at year end, whereas the average value of the Mexican peso against the U.S.
dollar was 4.4% lower, since the peso appreciated at the end of the year. In
2003, the peso depreciated against the U.S. dollar by 7.3% at year-end, and the
average value of the peso against the U.S. dollar during 2003 was 10.5% lower
than in 2002. In 2002, the peso depreciated against the U.S. dollar by 12.2% at
year-end, and the average value of the peso against the U.S. dollar during 2002
was 3.4% lower than in 2001. In 2001, the peso appreciated against the U.S.
dollar by 5.0% at year-end, and the average value of the peso against the U.S.
dollar during 2001 was 1.5% higher than in 2000.

        Severe devaluation or depreciation of the peso may also result in
disruption of the international foreign exchange markets and may limit our
ability to transfer or to convert pesos into U.S. dollars for the purpose of
making timely payments of interest and principal on our indebtedness. While the
Mexican government does not currently restrict, and for many years has not
restricted, the right or ability of Mexican or foreign persons or entities to
convert pesos into U.S. dollars or to transfer other currencies out of Mexico,
the government could institute restrictive exchange rate policies in the future.
Currency fluctuations will probably continue to affect our revenues and
expenses.

        Furthermore, fluctuations in the exchange rate between the peso and the
U.S. dollar will also affect the U.S. dollar equivalent of the peso price of the
Units (one "Series B Share" and one "Series L Share") on the Mexican Stock
Exchange and the price of American Depository Shares ("ADSs") on the New York
Stock Exchange. Because we pay cash dividends in pesos, exchange rate
fluctuations will affect the U.S. dollar amounts received by holders of American
Depository Receipts ("ADRs") upon conversion of such cash dividends by the
Depositary.

                                        4
<PAGE>

        High levels of inflation and high interest rates in Mexico could
        adversely affect our financial condition and results of operations

        Mexico has experienced high levels of inflation and high domestic
interest rates. The annual rate of inflation, as measured by changes in the
National Consumer Price Index was 5.19% in 2004, 3.98% in 2003, and 5.7% in
2002. Inflation for the first four months of 2005 was 1.15% according to the
Mexican Central Bank. Interest rates on 28-day Mexican treasury bills, or Cetes,
averaged during 2004, 6.82%; 6.23% during 2003, according to Banamex. On May 10,
2005, the 28-day Cetes rate was 9.81%. High interest rates in Mexico could
adversely affect our costs. Our earnings may also be affected by changes in
interest rates due to the impact those changes have on our variable-rate debt
instruments and beneficed by the interest we earn in our cash balance.

        Political events in Mexico, including transition to a new presidential
        administration, could affect Mexican economic policy and our operations

        The national elections held in July 2000 ended 71 years of rule by the
Institutional Revolutionary Party ("PRI") with the election of President Vicente
Fox, a member of the National Action Party ("PAN"), and resulted in the
increased representation of opposition parties in the Mexican Congress and in
mayoral and gubernatorial positions. There has been a lack of alignment between
the legislature and the President that has resulted in deadlock and has
prevented the timely implementation of economic reforms, which we believe has
had an adverse impact on the Mexican economy. Further delays may continue to
materially adversely affect the Mexican economy and our business. We will have a
new presidential election in 2006.

        Developments in other emerging market countries may adversely affect our
        business or the market price of our securities

        The market value of securities of Mexican companies is, to varying
degrees, affected by economic and market conditions in other emerging market
countries. Although economic conditions in such countries may differ
significantly from economic conditions in Mexico, investors' reactions to
developments in any of these other countries may have an adverse effect on the
market value of securities of Mexican issuers. The recent economic crisis in
Argentina did not have a significant adverse effect on the Mexican economy and
the value of Mexican securities. We cannot assure you that the market value of
our securities will not be adversely affected by events elsewhere, especially in
emerging markets.

        Developments in the U.S. economy may adversely affect our business

        Economic conditions in Mexico are heavily influenced by the condition of
the U.S. economy due to various factors, including commercial trade pursuant to
the North American Free Trade Agreement ("NAFTA"), U.S. investment in Mexico and
emigration from Mexico to the United States. Events and conditions affecting the
U.S. economy may adversely affect our business, results of operations, prospects
and financial condition.

                                        5
<PAGE>

RISKS RELATING TO OUR ORGANIZATION

        The chicken industry is characterized by long-term price declines and
        cyclical periods

        The Mexican chicken industry, like the chicken industry in other
countries, has been characterized by a long-term decline in prices in real
terms. The industry has undergone cyclical periods of higher prices and
profitability, followed by overproduction, leading to periods of lower prices
and profitability. Real prices for eggs and swine in Mexico have also declined
over the long term and have varied cyclically. The market that we serve is
subject to volatility with respect to supply, which affects prices. We cannot
assure you that future cyclicality, excess supply and downturns in real prices
will not adversely affect our results.

        The price of feed ingredients is subject to significant volatility

        The largest single component of our cost of sales is the cost of
ingredients used to prepare feed, including sorghum, soybean meal, corn, fish
meal, meat meal and, for certain chicken products, marigold extract. The price
of most of our feed ingredients is subject to significant volatility resulting
from weather, the size of harvests, transportation and storage costs,
governmental agricultural policies, currency exchange rates and other factors.
Given the long-term declining trends in real chicken prices, we may experience
difficulty or delays in passing any increase in grain costs to customers.
Accordingly, increases in the prices of the main ingredients used in the
preparation of feed may have a material adverse effect on our margins and
results of operations. Since we purchase many feed ingredients in U.S. dollars,
from time to time we may acquire financial instruments to protect us against
exchange rate fluctuations.

        Our operations depend on raising animals and meat processing, which are
        subject to risks such as disease, contamination and adverse weather
        conditions

        Our operations involve raising animals and are subject to a variety of
risks, including disease, contamination and adverse weather conditions.
Chickens, in particular, are susceptible to infections by a variety of
microbiological agents. Since 1983, the avian influenza virus ("AIV") has been
widespread in the United States and in Mexico. During 2003, AIV was widespread
in Asian countries and the United States, and Mexico, to avoid having the
disease spread from the United States, imposed certain restrictions on the
importation of chicken from affected U.S. states. During 2004 AIV was still
present in Asian countries and the United States; during 2004, Mexico has been
eliminating some restrictions on the importation of chicken from certain U.S.
states, as the sanitary condition in those states improve. In the past we have
experienced limited outbreaks of various diseases that have resulted in higher
mortality rates.

        Meat and eggs are subject to contamination during processing and
distribution. We do not believe that contamination of individual shipments
during distribution would have a material adverse effect on our operations.
Contamination during processing, however, could affect a larger number of our
poultry products and therefore could have a more significant impact on
operations.

        In 2002, we experienced a loss of chickens at our Peninsula Complex due
to the effects of Hurricane Isidore. Future hurricanes or other adverse weather
conditions could result in additional losses of inventory and damage to our
plants and equipment. Our facilities near Mexico's coast are most subject to the
risk of severe weather.

        The use of nutritional supplements and possibility of contamination
        expose us to risk of loss of consumer confidence in the chicken industry

                                        6
<PAGE>

        To reduce contamination, we use specialized feedstock and nutritional
supplements that have been approved by the Mexican government and meet
international industry standards. We cannot assure you, however, that in the
future we will not be materially adversely affected by claims or consumer
concerns arising out of the use of these products in raising our animals.

        Our sales are entirely dependent on consumer preferences, and the loss
of consumer confidence in the products sold by Mexican meat and egg producers as
a result of disease, contamination or other reasons, even if not related to our
own products, could have a material adverse effect on our results of operations.

        We face significant competition from other chicken producers in all of
        our geographic markets and product lines

        We are Mexico's largest chicken producer, but we face significant
competition from other producers in all of the markets in which we sell our
products. In 2004, we accounted for approximately 30.7% of total chicken
production in Mexico. There are two other major vertically integrated chicken
producers in Mexico, which together with Bachoco account for more than 50.0% of
Mexican chicken production, with the balance distributed among approximately two
hundred small- and medium-sized integrated and non-integrated producers.

        Each of the two other major companies has substantial financial
resources and strengths in particular product lines and regions. We expect to
continue to face strong competition in every market, as our existing or new
competitors are likely to broaden their product lines and extend their
geographic coverage. Accordingly, we cannot assure you that our performance will
not be adversely affected by increased competition.

        We face increased competition from U.S. producers

        In January 2003, import quotas and most tariffs on poultry, eggs and
swine were eliminated, as NAFTA. Poultry producers in the United States have
developed extremely low-cost production methods and have been successful in
exporting primarily frozen and further-processed poultry to other countries,
especially in periods of overcapacity in the United States. As tariff barriers
decline under NAFTA, U.S. producers can be expected to increase exports to
Mexico, which could have a material adverse effect on our performance.

        In January 2003 the Mexican government imposed temporary restrictions on
chicken leg quarters imported from the U.S. and both governments confirmed this
safeguard in July 2003. The safeguard consists of a five-year limited poultry
import measure. The measure, which became effective in 2003, includes quotas and
an initial tariff of 98.8% on chicken leg quarters which will slowly decrease
until it reaches 0% in 2008.

        We are a holding company with no substantial operations and depend on
        our subsidiaries for cash flow

        We are a holding company with no substantial operations and,
consequently, we are dependent on dividends and other payments from subsidiaries
for virtually all of our cash flow, including cash flow to pay taxes, service
debt, make equity investments, finance the growth of subsidiaries and pay
dividends to stockholders. Together with Mexican law, our ability to pay
dividends may, in the future, be limited by financial covenants in debt
instruments that we, or our subsidiaries, may acquire.

                                        7
<PAGE>

RISKS RELATING TO THE ADSS, THE UNITS AND THE SHARES

        The Robinson Bours family controls our management and their interests
        may differ from other security holders

        Certain members of the Robinson Bours family hold the power to elect a
majority of the members of our board of directors and have the power to
determine the outcome of certain other actions requiring the approval of our
stockholders, including whether or not dividends are to be paid and the amount
of such dividends. The Robinson Bours family has established two Mexican trusts,
which they control ("Control Trust"), that together hold 496,500,000 Shares
outstanding on December 31, 2004, including Units and B Units (consisting of two
"Series B Shares") representing approximately 65.5% of the Series L Shares and
88.5% of the Series B Shares outstanding.

        Future sales of Units by the controlling stockholders may affect
        prevailing market prices for the ADSs and the Units

        The prevailing market prices for the ADSs and the Units could decline if
either:

        .   the Robinson Bours family were to sell substantial amounts of the
            Units, whether

                .   directly, or

                .   indirectly, through the Mexican trusts through which they
                    hold the Units; or

        .   the perception arose that such a sale could occur.

        The protections afforded to minority stockholders in Mexico are
        different from those in the United States

        Under Mexican law, the protections afforded to minority stockholders are
different from those in the United States. In particular, the law concerning
fiduciary duties of directors is not well developed, there is no procedure for
class actions or stockholder derivative actions, and there are different
procedural requirements for bringing stockholder lawsuits. As a result, in
practice it may be more difficult for our minority stockholders of Bachoco to
enforce their rights against us or our directors or our controlling stockholder
than it would be for stockholders of a U.S. company.

        Our bylaws restrict the ability of non-Mexican stockholders to invoke
        the protection of their governments with respect to their rights as
        stockholders

        As required by Mexican law, our bylaws provide that non-Mexican
stockholders shall be considered as Mexicans with respect to their ownership
interests in Bachoco and shall be deemed to have agreed not to invoke the
protection of their governments in certain circumstances. Under this provision,
a non-Mexican stockholder is deemed to have agreed not to invoke the protection
of its own government by asking such government to interpose a diplomatic claim
against the Mexican government with respect to the stockholder's rights as a
stockholder, but is not deemed to have waived any other rights it may have,
including any rights under the U.S. securities laws, with respect to its
investment in Bachoco. If you invoke such governmental protection in violation
of this agreement, your shares could be forfeited to the Mexican government.

                                        8
<PAGE>

        Our bylaws may only be enforced in Mexico

        Our bylaws provide that legal actions relating to the execution,
interpretation or performance of the bylaws may be brought only in Mexican
courts. As a result, it may be difficult for non-Mexican stockholders to enforce
their stockholder rights pursuant to the bylaws.

        It may be difficult to enforce civil liabilities against us or our
        directors, officers and controlling persons

        We are organized under the laws of Mexico, and most of our directors,
officers and controlling persons reside outside the United States. In addition,
all of our assets and their assets are located in Mexico. As a result, it may be
difficult for investors to effect service of process within the United States on
such persons or to enforce judgments against them. This pertains also to any
action based on civil liabilities under the U.S. federal securities laws. There
is doubt as to the enforceability against such persons in Mexico, whether in
original actions or in actions to enforce judgments of U.S. courts, of
liabilities based solely on the U.S. federal securities laws.

        Holders of L Shares and L Share ADSs have limited voting rights

        Pursuant to our bylaws, holders of Series L Shares are entitled to vote
only with respect to certain limited matters specified therein.

        Holders of Series L Shares can only vote on certain matters specified in
our bylaws. With regard to those matters, holders of ADRs may instruct the
depositary as to the exercise of the voting rights pertaining to the Series L
Shares constituting the Units represented by the ADSs. Holders of Series L
Shares are generally not entitled to vote in the election of the board of
directors, but holders of Series L Shares do have the right to elect or appoint
two directors to the board, which was reduced in April 2003 to 10 members.
Members of the Robinson Bours family with ownership interests in Bachoco
("Robinson Bours Stockholders") are the beneficial owners of 65.5% of the
outstanding Series L Shares and therefore have the power to elect or appoint the
two directors. In addition, holders of Series L Shares are not entitled to vote
on the declaration of dividends. Under Mexican law and our bylaws, the
declaration, amount and payment of annual dividends are determined at a meeting
of our stockholders by a majority vote of the holders of Series B Shares,
usually on the recommendation of the board of directors.

        Non-Mexican stockholders may not be entitled to participate in future
        preemptive rights offerings

        Under Mexican law and our bylaws, if we issue new shares for cash as a
part of a capital increase, we must grant our stockholders the right to purchase
a sufficient number of shares to maintain their existing ownership percentage in
the Company ("preemptive rights"). We can allow holders of ADSs in the United
States to exercise preemptive rights in any future capital increase only in one
of the following two circumstances:

        .   we file a registration statement with the Securities and Exchange
            Commission with respect to that future issuance of shares; or

        .   the offering qualifies for an exemption from the registration
            requirements of the Securities Act.

        We make no promises that we will file a registration statement with the
Securities and Exchange Commission to allow holders of ADSs in the United States
to participate in a preemptive rights offering. As a result, the equity
interests of such holders in the Company may be diluted proportionately. In
addition, under current Mexican law, it is not practicable for the depositary to
sell preemptive rights and distribute the proceeds from such sales to ADS
holders.

                                        9
<PAGE>

        Corporate disclosure and accounting in Mexico may differ from other
        countries

        There may be less, or different, publicly available information about
issuers of securities in Mexico than is regularly published by or about issuers
of securities in other countries with highly developed capital markets. In
addition, due to country-by-country differences in accounting and other
reporting principles and standards, our corporate disclosures may differ in
content from disclosures made under other principles and standards, such as U.S.
GAAP.

ITEM 4.  INFORMATION ON THE COMPANY

GENERAL

        Our legal name is Industrias Bachoco, S.A. de C.V., and we frequently
refer to ourselves commercially as Bachoco. We were incorporated in Mexico on
April 17, 1980. Our headquarters are located at Avenida Tecnologico No. 401,
Ciudad Industrial 38010, Celaya, Guanajuato, Mexico, telephone (011) (52) (461)
618-3500. We have four principal product lines: chicken, eggs, commercial animal
feed and swine.

        We are the largest poultry producer in Mexico. In 2004, we produced
approximately 7.7 million chickens per week and accounted for approximately
30.7% of total chicken production in Mexico. As a vertically integrated
producer, we control virtually all aspects of the production and distribution
process, which enables us to exercise cost controls and to maintain high
standards of quality, service and efficiency. With over 700 production and
distribution facilities dispersed throughout Mexico, our operations include the
following:

        .   preparing feed;

        .   breeding, hatching and growing chickens; and

        .   processing, packaging and distributing chicken products.

        Sales of chicken products accounted for 78.5% of our net revenues in
2004.

        We are also a significant producer of commercial animal feed. We sell
our feed both through distributors and directly to small producers. We began
producing feed in 2000 as a result of the acquisition of 100% of the stock of
Grupo Campi, S.A. de C.V. ("Grupo Campi") on December 22, 1999 for Ps.1,591.7
million.

        Operating principally in southeastern Mexico and the Yucatan Peninsula,
Grupo Campi was the fourth largest chicken producer in Mexico and an important
producer of animal feed. In 2004, we sold approximately 6,150 tonnes of feed per
week to external customers, which amounted to 6.6% of our total revenues for
that year.

        In February 2001, we reached an agreement with Avicola Cotaxtla, a
broiler producer located in Veracruz, with a capacity of approximately 3 million
chickens per cycle. The agreement was in a part a lease of assets and in part a
contract grower agreement. As a result of this agreement, we strengthened our
presence in this region of the country.

                                       10
<PAGE>

        In September 2001, we acquired most of the assets of the egg operations
of both Avicola Nochistongo and Avicola Simon Bolivar, two important producers
of eggs in Mexico. With these acquisitions we emerged as one of the largest
producers of eggs in Mexico: we now produce approximately 3.6 million dozen eggs
per week. We are an innovator in packaging and marketing eggs. Egg sales
accounted for 10.9% of our net revenues in 2004.

        In July 2004, we reached an agreement for renting the facilities of
UPAVAT and UPATEC, a small producer of table eggs in the state of Puebla, south
of Mexico city, with a capacity of about 0.75 million of lying hens.

        We also sell swine on the hoof to meat packers for pork product
production. In 2004, sales of swine accounted for 1.1% of our net revenues.

        The remaining portion of our net revenues in 2004 consisted of
miscellaneous poultry-related products.

        The following table sets forth, for each of the periods presented, the
volume of chicken, feed, eggs and swine that we sold.

                                             BACHOCO SALES VOLUME
                                           (in thousands of tonnes)

                                           YEAR ENDING DECEMBER 31,
                            ----------------------------------------------------
                              2000       2001       2002       2003       2004
                            --------   --------   --------   --------   --------
Chicken .................      601.1      662.2      665.4      655.5      733.0
Eggs ....................       70.0       85.6      131.7      132.1      138.1
Swine ...................        9.0        9.0        9.0        8.5        9.1
Feed ....................      292.4      346.0      324.7      316.2      320.7

        Due to acquisitions, internal growth and improved efficiency, the volume
of chicken we sold in 2004 showed an increase of 76.3 % over the volume we sold
in 1999 (compared to an increase of 33.9% in chicken production in Mexico
overall). Over the same period, our share of overall Mexican chicken production
increased from 23.3% to approximately 30.7%. We improved the efficiency of the
facilities we acquired to take full advantage of production capacity and
distribution opportunities.

        The Mexican poultry industry varies regionally, and few producers
operate in multiple regions. We believe we have the broadest geographic market
coverage in the Mexican poultry industry and that we are one of the largest
poultry suppliers in the Mexico City metropolitan region (which accounts for a
significant portion of overall Mexican chicken consumption). We currently sell
in every major product category and channel of distribution for poultry products
within the regions that we serve. We expect to continue to do so in order to
meet growing consumer demand.

BACKGROUND AND OWNERSHIP STRUCTURE

        Founded in 1952 by the Robinson Bours family as a small commercial egg
operation in the state of Sonora, we grew by expanding our existing facilities
and acquiring additional facilities from other poultry producers. In 1974, we
established operations in Celaya, located in the agricultural region of Bajio,
to begin serving the Mexico City metropolitan region. Beginning in 1988, our
management recognized the potential for growth in Mexican chicken consumption,
as well as the advantages of a large, vertically integrated operation. As a
result, we began to seek opportunities for geographic expansion and to increase
production capacity and market share. We extended our market coverage
(particularly in 1993 and 1994) by purchasing fixed assets and inventory from
major regional producers that faced financial difficulties. Following each
acquisition, we made substantial investments to apply our production and
distribution methods and reap the benefits of vertical integration and economies
of scale, improving the performance of the acquired facilities.

                                       11
<PAGE>

        In April 1995 Robinson Bours Stockholders created a trust (the "Control
Trust"), the principal purpose of which was to hold a controlling interest in
our Series B Shares. Our common stock ("Common Stock") consists of Series B
Shares ("Series B Shares") and Series L Shares of limited voting stock ("Series
L Shares") (collectively, the "Shares"). The Shares are grouped into units. Each
Unit ("Unit") consists of one Series B Share and one Series L Share. Each B Unit
("B Unit") consists of two Series B Shares. The Shares constituting each Unit or
B Unit will not be separable until September 2007, at which time the Units and B
Units will automatically separate into their component shares.

        In September 1997, we made an initial public offering of Units
representing 17.25% of the outstanding Shares. Following such offering, the
Control Trust held Units and B Units representing 68.0% of the outstanding
Series B Shares. As of December 31, 2004, the Robinson Bours Stockholders owned
Units and B Units representing 88.5% of the Series B Shares outstanding. As a
result, the Robinson Bours Stockholders continue to have the power to control
our Company.

        Members of the Robinson Bours family, together with certain of our
executive officers, hold a majority of the seats on our board of directors. In
April 2002, Javier Robinson Bours Castelo assumed the position of Chairman of
the board of directors, replacing Enrique Robinson Bours Almada.

        In November 1998, we approved a stock repurchase plan (the "Repurchase
Plan"), which allows us to repurchase up to 3% of the total Shares outstanding
and trading on the Mexican Stock Exchange (Bolsa Mexicana de Valores), in
accordance with Mexican securities laws. To execute the Repurchase Plan, we
created a reserve of Ps.272.4 million (expressed in constant pesos as of
December 31, 2004), which reduced retained earnings on our balance sheet. As of
May 15, 2005, we had repurchased no Units.

        On December 22, 1999, we acquired 100% of the stock of Grupo Campi for
Ps.1,591.7 million. The fourth largest chicken producer in Mexico and an
important producer of animal feed, Grupo Campi operates principally in the
southeastern region of Mexico and the Yucatan Peninsula. We made this
acquisition as part of our overall strategy to extend our distribution network
to cover the southern part of Mexico. Because the Grupo Campi production centers
are located in a region where we can grow broilers efficiently, we also
integrated two new complexes there. We have now completed the coordination and
integration of the operations at these new complexes with the operations at the
rest of our complexes.

        On September 20, 2001, we acquired most of the assets of the eggs
business of Avicola Nochistongo, one of the ten largest producers of eggs in
Mexico with operations located in the La Laguna region in north-central Mexico
and a capacity of about 3 million laying hens.

        At the end of September 2001, we acquired most of the assets of Avicola
Simon Bolivar, one of the fifteen largest producers of eggs in Mexico and a
producer of broilers, with operations located in the La Laguna region in
north-central Mexico with a production capacity of about 2 million laying hens
and approximately 120,000 chickens per week. The assets we acquired included
farms, a feed mill, a processing plant and several distribution centers.

                                       12
<PAGE>

        With these acquisitions, we have become one of the largest producers and
distributors of eggs in Mexico with a market share of approximately 8.5% in
terms of volume, and we have also reinforced our leading position in the broiler
industry in Mexico.

        During 2003, we implemented two important projects to expand the
facilities at our Northwest Complex and Yucatan Peninsula Complex to increase
production capacity in our chicken business. Both of these projects were
completed by the end of the third quarter of 2004. These facilities are ideally
suited for the expansion projects due to their sanitary status and their
geographical location. Both complexes were expanded to increase capacity by
approximately 50%, which will increase opportunities for potential future
exports as well as for meeting consumer demand in those regions and in other
regions in Mexico. The new facilities in both complexes have been equipped with
the best technology available. These projects were financed with internal
resources generated by our own operations.

        In July 2004, we reached an agreement for renting the facilities of
UPAVAT and UPATEC, a small producer of table eggs in the state of Puebla, south
of Mexico city, with a capacity of about 0.75 million of lying hens. This
operation allows us to start the production of table eggs in southern Mexico.

        On February 23, 2005, the Company announced that it is evaluating the
possibilities of a business relationship with Sanjor, a producer located in the
Yucatan Peninsula. The Company expects to reach a decision by the end of June
2005.

BUSINESS STRATEGY

        Over the past decade we have substantially increased our chicken
production, establishing ourselves in every major product category and
distribution channel for chicken and expanding to cover a geographic market in
Mexico that is more widespread than any other chicken producer. We have also
increased the efficiency of our production process and built a reputation for
the freshness of our chicken products and quality of our customer service.

        The Mexican poultry industry has experienced considerable consolidation
in recent years, in which we have participated. We continue to evaluate possible
acquisitions of other poultry producers or production facilities from time to
time and may pursue certain opportunities consistent with our business strategy.

        The key elements of our business strategy are as follows:

        .   Increased market penetration through expanded distribution. We have
            an extensive distribution network, supported by our own
            transportation fleet, superior knowledge of existing wholesale
            channels and strategically located cold storage warehouses and
            facilities. Since 1992, we have substantially increased our
            distribution routes. We plan to continue to develop and improve our
            distribution network and systems in every product category and
            throughout our expanded geographic coverage in Mexico.

        .   Increased service and market responsiveness. We seek to remain a
            leader in the Mexican poultry market by maintaining high standards
            of customer service and continuing to be responsive to the changing
            needs of varying market segments. As part of this strategy, we have
            structured our operations in such a way as to enable us to vary the
            size, weight and color of our chicken products, depending upon the
            particular demands of the market segment. In addition, we have
            decentralized order and sales services from our headquarters to our
            cold storage warehouses and facilities, which serve as midpoints in
            the distribution chain to wholesalers and local customers. This
            strategy allows us to stay closer to our customer base and to better
            cultivate growing customer segments, such as food-service operators,
            supermarkets and food wholesale clubs.

                                       13
<PAGE>

        .   Low-cost production and operating efficiency. We are among Mexico's
            lowest-cost producers and distributors of chicken, due in part to
            economies of scale and vertically integrated operations. We pursue
            on-going programs to increase operating efficiencies and reduce
            operating costs.

        .   Continued brand differentiation. We have developed a brand image for
            premium fresh chicken and eggs in Mexico. Building on the success of
            our branded products to date, we seek to continue to promote our
            brand name through billboards, packaging, special publicity
            campaigns and through development of brand loyalty among wholesale
            and retail distributors.

CAPITAL EXPENDITURES

        Over the last three years, we have financed our capital expenditures
with resources generated by our operations. We made the following capital
expenditures during the last three years:

        .   In 2002, we made capital expenditures of Ps.288.7 million net, with
            which we:

                .   continued to update our transportation fleet, farms,
                    processing plants and feed mills;

                .   improved our distribution network;

                .   increased production capacity in our Northwest Complex,
                    which is located in Culiacan.

        .   In 2003, we made capital expenditures of Ps.794.8 million net, with
            which we:

                .   continued to update our transportation fleet, farms,
                    processing plants and feed mills;

                .   improved and expanded our distribution network;

                .   increased production capacity in our Northwest Complex and
                    Yucatan Peninsula Complexs.

        .   In 2004, we made capital expenditures of Ps.438.2 million net, with
            which we:

                .   continued to update our transportation fleet, farms,
                    processing plants and feed mills;

                .   improved and expanded our distribution network;

                .   increased capacity projects in our Northwest and Yucatan
                    Peninsula Complex; and

                .   increased production capacity of table eggs in our Northwest
                    Complex, at Mexicali, near the border with the U.S.

                                       14
<PAGE>

BUSINESS OVERVIEW

CHICKEN MARKET

        Mexican consumers value distinct characteristics in their chicken.
Virtually all chicken sold by us and other major chicken producers in Mexico is
fresh. Fresh chicken is a central ingredient in many traditional Mexican dishes
and the leading meat consumed in Mexico according to data from UNA.
Further-processed chicken, such as heat-and-serve products, frozen dinners,
chicken nuggets and other similar foods, has found limited acceptance among
Mexican consumers due to historical consumer preferences for fresh chicken and
the fact that many Mexicans have limited freezer capacity and limited access to
microwaves or other types of ovens.

        In the last five years, we have noticed an increased preference although
limited, among Mexican consumers for further-processed fresh chicken
products--mostly marinated and pre-formed chicken products. We participate
significantly in the provision of these products. We estimate that
further-processed chicken products currently account for approximately 5.0% of
the chicken sold in Mexico.

        Mexican consumers, mainly in central and south Mexico, also generally
prefer chicken with pronounced yellow skin pigmentation, a characteristic found
mainly in our public-market and supermarket-broiler chicken products that we
attain by including marigold extract in our chicken feed. We have also noticed
an increased demand for smaller, whole, fresh chicken from various fast-food
outlets, principally chicken roasting shops (rosticerias and asaderos), which
have developed rapidly in recent years.

        According to data obtained from the UNA, total Mexican chicken
consumption per capita increased by 17.8% from 2000 to 2004. Chicken is the
leading meat consumed in Mexico, and it accounted for approximately 47.0% of all
meat produced in Mexico in 2004. The following table sets forth total Mexican
production of chicken, pork and beef for 2000 to 2004.

                  MEXICAN PRODUCTION OF CHICKEN, BEEF AND PORK
                            (in thousands of tonnes)*

                              2000       2001       2002       2003       2004
                            --------   --------   --------   --------   --------
Chicken .................      1,936      2,067      2,187      2,290      2,390
Beef ....................      1,408      1,428      1,451      1,496      1,543
Pork ....................      1,034      1,065      1,085      1,100      1,150

*Sources: UNA for chicken and beef; USDA for pork.

        The Mexican chicken industry, like chicken industries in other
countries, is characterized by a long-term decline in real prices in real terms
in conjunction with cyclical periods of higher profitability leading to
overproduction followed by periods of lower prices and lower profitability. The
price recovered slightly in 2000 due to reduced supply in the first part of the
year. During 2001, chicken prices declined as a result of excess supply during
the first half of the year, the economic slowdown experienced by the country at
the end of the year and a decrease in the cost of the main feed ingredients. In
2002, chicken prices increased slightly by approximately 2.5% over 2001, as a
result of the worldwide increase in the cost of feed ingredients at the end of
the year. In 2003, chicken prices decreased by approximately 4.0% over 2002,
mainly due to an oversupply in domestic production that was present mainly in
the second half of the year and a decrease in the purchasing power of the
average consumer. In 2004, chicken prices increased by approximately by 6.7%,
mainly as a result of an increase in the cost of the main feed ingredients
worldwide, and a more normalized supply in Mexico during the second half of the
year. We believe that Mexican chicken prices may decline further in real terms
and that prices for chicken may also vary cyclically.

                                       15
<PAGE>

        We believe that changes in Mexican chicken consumption correlate closely
with changing chicken prices and their effect on consumer purchasing power.
Chicken consumption increased 8.5% in 2000 due to declines in chicken prices, an
increase in supply and improved economic conditions in Mexico. Consumption
increased further by 6.7% in 2001 due to further declines in chicken prices and
increased supply. The trend in increased consumption continued in 2002 with an
increase of 5.8% due to increased supply, in 2003 with an increase of 6.1% and
in 2004 with an increase of 3.4% due to a further increase of supply coming
mainly from domestic production

CHICKEN PRODUCTS

        Five principal product categories exist for fresh chicken in Mexico:
live, public market, rotisserie, chicken parts and supermarket broiler.

     "Live" chicken is delivered alive to small independent slaughtering
     operations or to wholesalers that contract with independent slaughtering
     operations for processing. The freshly slaughtered chicken is then sold to
     chicken shops and other specialized retailers for sale to consumers and in
     some areas is sold directly to consumers by the slaughterhouse. According
     to UNA, live chicken accounts for approximately 30.0% by volume of the
     chicken sold by producers in Mexico.

     "Public Market" chicken is a whole broiler presented uneviscerated,
     generally sold within 48 hours after slaughter in public markets throughout
     Mexico, but primarily concentrated in the Mexico City metropolitan region.
     According to UNA, public market chicken accounts for approximately 26.0% by
     volume of the chicken sold by producers in Mexico.

     "Rotisserie" chicken is a whole broiler presented eviscerated and ready to
     cook. Rotisserie chicken is sold by wholesalers and directly by producers
     to small shops, stands (rosticerias or asaderos) and supermarkets, which
     cook the chicken and sell it whole and freshly cooked to the end-consumer,
     providing an economical form of fast-food. According to UNA, rotisserie
     chicken accounts for approximately 23.0% by volume of the chicken sold by
     producers in Mexico.

     "Chicken Parts" refers to cut-up fresh chicken parts sold wrapped in trays
     or in bulk principally to supermarket chains, the fast-food industry and
     other institutional food-service providers. Producers generally sell
     directly to the supermarket chains and deliver the chicken directly to the
     outlet. Sales to the institutional market often require customized cutting
     and presentation. According to UNA, chicken parts account for approximately
     11.0% by volume of the chicken sold by producers in Mexico.

     "Supermarket Broiler" chicken is a fresh whole broiler presented with the
     edible viscera packed separately. In most cases it is sold directly by
     producers to supermarkets and, in some regions, to other independent food
     shops. Mexican consumers' preference for freshness requires regular
     deliveries of chicken to supermarkets and other food shops. According to
     UNA, supermarket broiler chicken accounts for approximately 5.0% of the
     volume of the chicken sold by producers in Mexico.

        We also sell further-processed chicken products to supermarkets and
other retailers. The following table sets forth, for the periods indicated, the
sales volume in tonnes and as a percentage of the total volume of chicken sold
for each of our principal lines of chicken products.

                                       16
<PAGE>

<TABLE>
<CAPTION>
                                            YEAR ENDED DECEMBER 31,
                       -----------------------------------------------------------------
                               2000                   2001                   2002
                       -------------------    -------------------    -------------------
                                    % OF                   % OF                   % OF
                        VOLUME      TOTAL      VOLUME      TOTAL      VOLUME      TOTAL
                       --------   --------    --------   --------    --------   --------
                                   (thousands of tonnes, except percentages)
<S>                       <C>        <C>         <C>        <C>         <C>        <C>
Public Market and
  Rotisserie .......      336.4       56.0       339.3       51.3       307.1       46.2
Supermarket Broiler,
  Chicken Parts and
  Other(1) .........      138.7       23.0       151.3       22.8       191.6       28.8
Live ...............      126.0       21.0       171.6       25.9       166.7       25.0
                       --------   --------    --------   --------    --------   --------
Total ..............      601.1      100.0%      662.2      100.0%      665.4      100.0%
                       ========   ========    ========   ========    ========   ========
<CAPTION>
                                  YEAR ENDED DECEMBER 31,
                               2003                   2004
                       -------------------    -------------------
                                    % OF                  % OF
                         VOLUME     TOTAL      VOLUME     TOTAL
                       --------   --------    --------   --------
                        (thousands of tonnes, except percentages)
<S>                       <C>        <C>         <C>        <C>
Public Market and
  Rotisserie .......      288.1       44.0       319.1       43.5
Supermarket Broiler,
  Chicken Parts and
  Other(1) .........      194.9       29.7       219.6       30.0
Live ...............      172.5       26.3       194.4       26.5
                       --------   --------    --------   --------
Total ..............      655.5      100.0%      733.1      100.0%
                       ========   ========    ========   ========
</TABLE>

----------
(1)  "Other" comprises sales of further-processed poultry products, viscera and
     other products.

        Our product mix varies from region to region, reflecting different
consumption and distribution patterns. Based on market demand, we believe that
fresh, rather than frozen, chicken will continue to dominate the Mexican market.
Furthermore, we believe that consumer demand for value-added fresh chicken
products, such as rotisserie chicken, supermarket broilers and chicken parts,
will increase over time. Accordingly, we continue to focus principally on
producing fresh chicken, including value-added fresh chicken products.

CHICKEN MARKETING, SALES AND DISTRIBUTION

        We have developed an extensive distribution system that we believe is
the largest and most modern of any chicken or egg producer in Mexico. We use
various distribution channels in every major product category to service
different market segments. For example, in the Mexico City area, we transport
most public market chicken directly to wholesalers, who then transport the
chicken to retail sellers. We use our own fleet to transport the majority of
rotisserie chickens, supermarket broilers and other chicken products to our
customers. We try to cooperate with existing distribution channels and do not
compete with wholesale distributors, except in areas where we supply our own
distribution capacity where needed for market penetration.

        We distribute products from our seven processing plants (located in
Celaya, Culiacan, Puebla, Lagos de Moreno, Coatzacoalcos, Merida and Gomez
Palacio) to our cold-storage facilities and warehouses, which serve as a
mid-point in distribution to wholesalers and local customers. From our
cold-storage facilities, we service wholesalers (who in turn deliver to their
customers) and transport certain products directly to supermarkets and
food-service operations. Our distribution infrastructure includes 59
cold-storage warehouses and facilities and a large fleet of vehicles. The
decentralized sales force permits us to remain attuned to developments in the
regions we serve and to develop close relationships with customers.

        Through recent acquisitions and production agreements, we have expanded
our distribution network, which now covers almost all of Mexico:

            .   In 2001, through an agreement with Avicola Cotaxtla, a broiler
                producer located in Veracruz, we strengthened our presence in
                that important region of the country.

            .   By acquiring most of the assets of both Avicola Nochistongo and
                Avicola Simon Bolivar in September 2001, we further expanded and
                consolidated our distribution network, mainly in the
                northeastern part of Mexico.

                                       17
<PAGE>

            .   In 2002, we consolidated our presence in the northeastern part
                of the country, mainly in the state of Nuevo Leon, due to the
                consolidation of our recent acquisitions, made at the end of
                2001.

            .   During 2003 we implemented two important projects to expand the
                facilities at our Northwest Complex and Peninsula Complex to
                increase production capacity in our chicken business. These
                facilities are ideally suited for the expansion projects due to
                their sanitary status and their geographical location. Both
                complexes were expanded in the third quarter of 2004 by
                approximately 50%, which increased opportunities for future
                exports as well as for meeting consumer demand in those regions
                and in other regions in Mexico.

            .   During 2004, we finished our projects to expand the facilities
                at our Northwest Complex and Peninsula Complex, and on February
                23, 2005, we announced that we are evaluating the possibilities
                of a business relationship with Sanjor, a producer located in
                the Yucatan Peninsula. We expect to reach a conclusion about
                this relationship by the end of June 2005.

        In the following paragraphs we provide a description of our marketing,
sales and distribution strategies for each of our major chicken products.

            .   Live chicken - We sell live chicken primarily to wholesalers,
                which contract out the processing to independent slaughterhouses
                and then resell the processed product as public market chicken.
                To a lesser extent, we sell to small independent slaughterhouses
                in the southeast, where live chicken continues to be the
                standard for consumption. Additionally, customers can purchase
                live chicken directly from us on our farms. However, we believe
                that the market as a whole is moving away from live chicken.

            .   Public market chicken - We believe that we are the largest
                producer of public market chicken in Mexico. This is supported
                by information published by UNA and our own internal
                information. We regularly sell to more than 50 of the
                approximately 200 whole fresh chicken wholesalers operating in
                the Mexico City region. Most of our wholesale customers rely
                primarily on us for public market chicken, although we have no
                exclusive supply agreements. Our principal focus in this market
                has been to provide superior distribution and service to
                selected wholesalers in order to maintain and further develop
                loyalty. Public market chicken is ordinarily sold to consumers
                without any packaging or other identification of the producer,
                but our distribution system encourages wholesalers to sell to
                retailers from our own "Bachoco" trailers, reinforcing our
                reputation for freshness and efficiency of service and fostering
                brand loyalty among retailers. We believe we have developed
                excellent relationships with the wholesalers we serve.

            .   Rotisserie chicken - Rotisserie chicken has been one of our
                fastest growing products since we first started producing it in
                1988. We sell rotisserie chicken directly to rosticerias,
                asaderos and supermarkets. We attribute the growth in our sales
                of rotisserie chicken in large part to the rapid growth of the
                market for freshly cooked chicken sold by rosticerias and
                asaderos and in the rotisserie sections of supermarkets. We
                expect this market to continue to grow because of an
                ever-increasing consumer demand for convenient, low-priced and
                high-quality fast food. Success in supplying rotisserie chicken
                depends on consistency and good service, and only larger
                producers with more modern processing facilities and
                distribution capacity can compete in this market. We increased
                our market share by consistently providing high-quality products
                and by using our own trucking fleet to deliver directly to
                retailers on a punctual and dependable basis. We expect to
                expand sales of rotisserie chicken by leveraging our
                increasingly developed transportation and distribution network.

                                       18
<PAGE>

            .   Supermarket broiler chicken - We sell supermarket broilers, as
                well as chicken parts and eggs, directly to the principal
                supermarkets, convenience store chains and wholesale clubs in
                Mexico. In order to build consumer loyalty for our supermarket
                broiler chicken, we emphasize our brand image as well as our
                superior service, reinforced by frequent delivery to ensure
                freshness. Each chain negotiates purchases centrally, but we
                deliver directly to every point of sale, ordinarily at least
                once every 48 hours. We believe that we lead the market in
                frequency of deliveries to supermarkets.

            .   Chicken parts - We sell chicken parts principally to
                supermarkets, using the same marketing strategy that we use for
                supermarket broiler chicken. We are also an important supplier
                of chicken parts to the growing franchise fast-food and
                institutional food-service industries. We continue to develop
                custom-cutting processes to help meet demand from fast-food and
                institutional customers for a wider variety of chicken parts.

            .   Frozen and further-processed poultry

                  .   Frozen, heat-and-serve and other further-processed poultry
                      products make up only a small proportion of total Mexican
                      poultry consumption today. Mexican consumers have a
                      greater preference for fresh chicken than their U.S.
                      counterparts, and they are less likely to have
                      refrigerators or microwave or regular ovens needed to
                      store and cook frozen and processed poultry. However, the
                      potential for substantial growth in this market is large,
                      and we believe that our distribution network, our large
                      market share for supermarket chicken sales, our brand name
                      and our experience in a wide range of existing Mexican
                      distribution channels will be important competitive
                      strengths in this area.

                  .   Our 2004 sales of fresh further-processed poultry products
                      increased approximately 30% over 2003 sales. We are moving
                      to produce and introduce various fresh further-processed
                      poultry products in Mexico, which we have developed in
                      accordance with Mexican customer preferences. We will
                      continue to do so as this market grows.

EGGS

        Annual per capita egg consumption in Mexico is relatively high compared
to other countries. In 2004, annual per capita consumption of eggs in Mexico was
approximately 21.5 kg, according to data from UNA. Mexican egg consumption per
capita increased 7.5% from 2000 to 2004. This high level of consumption is due
in part to the fact that eggs are a relatively inexpensive source of protein.

        The Mexican egg industry is more fragmented than the broiler industry
but has experienced some degree of consolidation in recent years, including
acquisitions by us. According to UNA, the nine largest producers of eggs in
Mexico now account for approximately 39% of the market. As a result of our
September 2001 acquisitions of Avicola Nochistongo and Avicola Simon Bolivar,
two of the 15 largest egg producers, we have become one of the largest egg
producers in Mexico with an estimated market share of 6.3% in 2004. Our
marketing strategy for egg products is to increase brand recognition by
increasing sales of cartons with the "Bachoco" brand printed on them. In
addition, we aim to differentiate our eggs by their high quality and freshness.

                                       19
<PAGE>

        Eggs in Mexico have traditionally been distributed in large 360-egg
cases through wholesalers to retailers. The retailers, which are typically small
grocery shops, in turn sell the eggs by weight to consumers. At present,
approximately 22.0% of the eggs sold in Mexico are sold in packaged form, 7% are
sold in processed form and approximately 71% are sold in bulk to wholesalers.
The trend in recent years has been towards packaged egg sales. We expect that
the convenience, the development of brand loyalty and the growth of supermarket
chains will contribute to the continuance of this trend toward packaged eggs.

        We sell both brown and white eggs. Brown eggs presently account for
approximately 8.0% of Mexican egg consumption. The branded carton of brown eggs
is a premium product in the Mexican market. The Company believes that brown eggs
are less vulnerable to price fluctuations than white or unbranded eggs, because
consumers perceive them to be of higher quality. Brown eggs command a small
premium over white eggs. We are by far the leading producer of brown eggs in
Mexico and estimate that our production accounts for approximately 31.1% of the
Mexican brown egg market and 80.0% of the Mexican branded brown egg market.

        In some regions, however, we have reallocated part of our production
from brown eggs to white eggs due to local market preferences. In addition, the
recently acquired operations of Avicola Nochistongo and Avicola Simon Bolivar
produce mainly white eggs. Our main strategy in the eggs business is to
gradually move from bulk to packaged white eggs. Packaged eggs are less
vulnerable to price fluctuation and create brand loyalty.

        In 2004, we started a project to increase production capacity of table
eggs in our Northwest complex, at Mexicali, near the border with U.S.

        We have designed our egg distribution system to transport eggs from our
laying farms at Celaya, Los Mochis, Ciudad Obregon, Mexicali and La Laguna
regions to customers in all sales regions. We sell packaged eggs directly to all
of the principal supermarket chains in Mexico, with daily deliveries directly to
their outlets.

FEED

        According to Camara Nacional de la Industria de Transformacion
("CANACINTRA"), Mexican production of feed increased from 18.3 million tonnes in
1998 to 22.7 million tonnes in 2003. In 2003, Mexico was ranked the sixth
largest producer of feed in the world and the second largest in Latin America.

        Local production is composed of commercial and integrated manufacturers.
Commercial manufacturers produce for the market, while integrated manufacturers
that mostly produce for themselves and occasionally for other producers.
Integrated producers account for approximately 64.3% of total production.
Imports of feed come almost entirely from the United States and represent
approximately 1.7% of the total consumption in Mexico.

        We entered the feed business as a result of our acquisition of Grupo
Campi at the end of 1999. We sell to small livestock producers and through a
network of small distributors located mainly in central and southern Mexico. We
have benefited from economies of scale and synergies derived from producing feed
both for our own internal consumption and for sale to third parties. To promote
this business, in 2000 we opened a new mill in the state of Veracruz dedicated
exclusively to producing feed. We estimate that our feed business comprises
approximately 3.9% of the market share of the commercial (non-integrated) feed
business in Mexico.

                                       20
<PAGE>

SWINE

        We purchase breeder swine live from the United States and breed them at
facilities in Navojoa. We then raise swine to maturity at our farms in Celaya
and three other locations in Mexico. Mature swine is sold on the hoof to Mexican
swine meat packers for the production of pork products. In 2002, our swine
prices decreased by 21.3% as a result of an oversupply in the swine market due
primarily to increased imports from the United States. In 2003, swine prices
began to recover, increasing by 7.0%, due mostly to the fact that there was very
modest growth in domestic production and imports, and in 2004 our swine prices
increase by more than 20.0% as a result of increase in the cost of feed
ingredients and a more normalized supply and imports. Traditionally, Mexicans
consume less swine and swine products than chicken and other meats. We do not
currently intend to make material investments in this line of business.

RAW MATERIALS

        We purchase our breeding stock for broilers and layers from high-quality
suppliers. All of our breeder swine currently come from one supplier, but we
have changed suppliers from time to time and have numerous alternative sources
of supply.

        The largest single component of our cost of sales is the cost of
ingredients used in the preparation of feed including, principally, sorghum, soy
meal, corn, fish meal, meat meal, and for certain chicken products, marigold
extract. The price of these ingredients is subject to significant volatility
resulting from weather, the size of harvests, transportation and storage costs,
governmental agricultural policies, currency exchange rates and other factors.
To reduce the potential adverse effect of grain price fluctuations, we vary the
composition of our feed to take advantage of current market prices for the
various types of ingredients used.

        Beginning in 1992, the Mexican government lifted various procedural
restrictions on importing grains, and it is currently eliminating price supports
in favor of direct subsidies for domestic farmers. Under NAFTA, the government
eliminated the tariff on sorghum effective January 1, 1994, and eliminated
tariffs on all other grains that we use, except corn, on January 1, 2003. Corn
tariffs will be eliminated by 2008. We expect these developments to have a
positive effect on our cost of production as the cost of our ingredients more
closely track prices in the international commodity markets.

        At present, we take advantage of lower cost feed ingredients from
Mexican sources, when available. In 2004, we obtained approximately 35.0% of our
total grain needs from the domestic market. We believe that the quality of local
feed ingredients, particularly sorghum, is superior to that of imported feed
ingredients. In addition, the use of local feed ingredients allows us to save on
transportation costs and import duties. However, in southern Mexico where Grupo
Campi's complexes are located, domestic crops and feed ingredients are not
available. As such, these complexes use mainly imported grain.

        We may, from time to time, engage in hedging of our feed costs in the
future.

COMPETITION

CHICKEN

        Although we are Mexico's largest chicken producer, we face significant
competition from other producers in all of the markets in which we sell our
products. When combined with our two largest vertically integrated competitors,
we account for approximately 52.0% of total Mexican poultry production; the
balance is distributed among approximately two hundred small and medium-sized
integrated and non-integrated producers. Mexico's two other major chicken
producers are Pilgrim's Pride de Mexico, S.A. de C.V., a subsidiary of the U.S.
chicken producer Pilgrim's Pride Corporation, and Trasgo, S.A. de C.V., which
since April 1994 has been controlled by the U.S. chicken producer Tyson Foods,
Inc. The major producers, including Bachoco, have substantial cost advantages
over smaller, non-integrated producers arising from economies of scale and
control of feed preparation. To varying degrees, each of these companies has
substantial financial resources and strengths in particular product lines and
regions. We believe, however, that we have substantial competitive strengths
over our competitors, including a broader range of chicken products and broader
geographic coverage.

                                       21
<PAGE>

        Furthermore, there are considerable barriers to entry into large-scale
chicken production and distribution in Mexico, including, among others, the
consumer preference for fresh chicken, the weaknesses of transportation
infrastructure and varying regional consumer preferences among the various
product categories. The channels for distribution of chicken products, in
particular, are highly specialized and varied, and they call for in-depth
experience in market practices.

        Nonetheless, we expect that we will continue to face strong competition
in every market and that existing or new competitors are likely to broaden their
product lines and to extend their geographic coverage.

        Poultry producers in the United States have developed low-cost
production techniques and have been successful in exporting primarily frozen and
further-processed poultry to other countries, especially in periods of
overcapacity in the United States. As tariff barriers have declined under NAFTA,
we have experienced increased competition from U.S. poultry producers. According
to UNA, in 2004, imports of poultry products increased 0.1% in volume over
imports in 2003. This lower increase was caused in part by continued short-term
effects like temporary bans of imports by sanitary and health authorities, and a
recovery in prices in the U.S. markets. Mechanically de-boned poultry accounted
for approximately 42.8% of the imports.

        We expect that competition from U.S. exporters will continue to
increase. However, Mexican consumer acceptance of frozen or frozen
further-processed poultry products is low, and we do not anticipate that it will
grow significantly in the near future or that fresh chicken can be distributed
throughout Mexico from processing facilities in the United States in a
cost-effective fashion.

EGGS

        We are one of the largest producers of eggs in Mexico, with
approximately 6.3% of total Mexican egg production at the end of 2004. According
to UNA, the top nine producers together accounted for approximately 39.0% of
total Mexican egg production, with the balance distributed among hundreds of
smaller producers.

FEED

        Of the registered producers of feed in Mexico, integrated firms produce
approximately 64.3% of total production for their internal use, and the
remaining 35.7% is produced for sale to third parties. We estimate a market
share of approximately 3.9% in our feed product line.

SWINE

        The Mexican swine industry is highly fragmented, and no producer has
more than 2.5% of the market. On December 31, 2004, we had less than 1.0% of the
Mexican market share in swine. U.S. producers already compete in this market in
Mexico because tariff barriers on swine are moderate.

                                       22
<PAGE>

MEXICAN REGULATION

MEXICAN IMPORT REGULATION AND PRICE CONTROLS

        NAFTA became effective on January 1, 1994. Prior to NAFTA, the Mexican
poultry and egg markets were protected from foreign imports by a licensing and
quota system. Under NAFTA, Mexico implemented a transitional tariff rate quota
system for imports of poultry, eggs and swine from the United States. U.S.
exports to Mexico were duty-free up to the quota amount and were subject to an
ad valorem tax on all imports above that amount. As required by NAFTA, the
Mexican government eliminated all permanent quotas and tariffs on poultry, eggs
and swine in January 2003. With certain specific exceptions described below,
there are now no quotas or tariffs on imports of poultry, eggs and swine from
the U.S. We expect the elimination of these trade protections to stabilize the
level of imports over time and to permit improved private control over imports,
which may result in increased competition from importers.

        The pre-2003 scheme of quotas and tariffs, which has now been
        eliminated, was as follows:

            .   The quota for chicken was 120.3 thousand tonnes, which
                represents 5.7% of national consumption. Above the quota,
                imports were taxed ad valorem at 49.4%.

            .   Within the chicken quota, there were sub-quotas for whole
                chicken (16.6 thousand tonnes), poultry parts (31.6 thousand
                tonnes), whole turkeys, turkey parts, and de-boned chicken.
                Imports above the quota were also taxed at 49.4%. There was no
                quota amount for further-processed chicken; all imports were
                taxed at 49.4%.

            .   The quota for eggs was 8.2 thousand tonnes, which is less than
                1% of national consumption. Imports above the amount were taxed
                at 9.5% ad valorem.

            .   Imports of swine were subject to a quota of 80.3 thousand tonnes
                of fresh, frozen, and chilled meat, but were also taxed 2% on
                amounts below the quota (this tax was 4% in 2001). Amounts above
                the quota were taxed at 10% in 2002.

        Import limits and short-term tariffs that remain after January 2003 are
        as follows:

        The Mexican government has put in place a number of short-term tariffs
and import limits on poultry, eggs and swine:

            .   In January 2003, the Mexican government announced a temporary
                safeguard to stabilize the flow of poultry imports, which
                included an initial tariff of 98.8% on imports of chicken leg
                quarters. This safeguard was confirmed in July 2003 and will
                decrease annually until it reaches 0% in 2008. All other chicken
                products from the United States, including whole chicken,
                chicken parts other than leg quarters and eggs remain
                tariff-free.

            .   According to the safeguard, for 2004 the tariff in effect was
                59.3%, for imports of chicken leg quarter above the quota of
                102,010 tonnes.

            .   In late 2003, Mexico imposed temporary bans on chicken products
                coming from certain states of the United States due to avian
                influenza cases present in those states. Most of these bans have
                been eliminated.

                                       23
<PAGE>

            .   In October 1999, Mexico imposed an anti-dumping compensatory
                duty of $ 0.351 per kilogram (48% ad valorem) on swine and pork
                imports, in addition to the import tariff. The Mexican
                government announced the elimination of this duty on May 23,
                2003.

        In addition to NAFTA, Mexico has entered into free trade agreements with
several other countries including Chile, Europe, Colombia and Venezuela.
Although such agreements may result in lower tariffs on our own products, we
believe that imports from such countries will not increase substantially in the
future due to high transportation and distribution costs.

ANTITRUST REGULATIONS

        The Ley Federal de Competencia Economica ("Mexican Economic Competition
Law"), which took effect on June 22, 1993, regulates monopolies and monopolistic
practices. Under this law, all companies (including Bachoco) are required to
notify the Comision Federal de Competencia ("Federal Competition Commission") of
all proposed transactions exceeding specified threshold amounts as set forth in
the Mexican Economic Competition Law. The Federal Competition Commission can
impose conditions on, and prevent or unwind, any such transactions by Mexican
companies. We have complied with all requirements under this law.

ENVIRONMENTAL AND SANITARY REGULATION

        Our operations are subject to Mexican federal and state laws and
regulations relating to the protection of the environment. The principal laws
are Ley General de Equilibrio Ecologico y Proteccion Ambiental (General Law of
Ecological Balance and Environmental Protection--the "Environmental Law") and
Ley de Aguas Nacionales ("National Waters Law"). The Secretaria del Medio
Ambiente y Recursos Naturales (Ministry of Environment and Natural Resources,
or, "Semarnat"), administers the Environmental Law, and Comision Nacional del
Agua ("National Water Commission") administers the National Waters Law.

        The Environmental Law regulates water pollution, air pollution, noise
control and hazardous substances. Semarnat can bring administrative and criminal
proceedings against companies that violate environmental laws, and after certain
administrative procedures, it also has the power to close non-complying
facilities. Every company in Mexico is required to provide Semarnat with
periodic reports regarding compliance with the Environmental Law and the
regulations thereunder.

        The level of environmental regulation in Mexico has increased in recent
years, and enforcement of the law is improving. We expect this trend to continue
and to intensify with international agreements between Mexico and the United
States.

        In particular, Mexican environmental laws set forth standards for water
discharge that are applicable to poultry processing operations. Our processing
plants have water treatment facilities that comply with Mexican environmental
standards. We are implementing other investment projects in anticipation of
stricter environmental requirements in the future. We do not expect that
compliance with those Mexican federal environmental laws or Mexican state
environmental laws will have a material effect on our financial condition or
performance.

        The production, distribution and sale of chicken, eggs and swine are
subject to Mexican federal and state sanitary regulations. The principal
legislation is Ley General de Salud ("General Health Law") and Ley Federal de
Sanidad Animal ("Federal Animal Health Law"). The Federal Animal Health Law was
enacted in 1993, and, since then, we have been working closely with Mexican
authorities to develop regulatory standards and inspection methods for chicken
processing. Currently, Mexican authorities do not monitor production or inspect
products to the same degree as sanitary authorities in other countries, such as
the USDA in the United States. However, we believe that we are in compliance
with all applicable sanitary regulations.

                                       24
<PAGE>

ORGANIZATIONAL STRUCTURE

        We are a holding company with no operations other than holding the stock
of our subsidiaries, all of which are incorporated in Mexico, and engaging in
transactions with our subsidiaries. Our principal operating subsidiary is BSACV,
which owns our principal operating assets, and which accounted for 92.4% of
consolidated total assets as of December 31, 2004, and 92.5% of our consolidated
revenues for the year ended December 31, 2004.

        The following table shows our main subsidiaries as of December 31, 2002,
2003 and 2004:

<TABLE>
<CAPTION>
                                                        PERCENTAGE EQUITY INTEREST
                                                     --------------------------------
                                                        2002       2003        2004
                                                     --------    --------    --------
<S>                                                       <C>         <C>         <C>
Bachoco, S.A. de C.V. ("BSACV") ..................        100%        100%        100%
Operadora de Servicios de Personal, S.A. de C.V. .        100         100         100
Servicios de Personal Administrativo, S.A. de C.V.        100         100         100
SECBA, S.A. de C.V. ..............................          -           -         100
SEPETEC, S. A. de C.V. ...........................        100         100         100
Acuicola Bachoco, S.A. de C.V. ...................        100         100         100
Huevo y Derivados, S.A. de C.V. ..................         97          97          97
Pecuarius Laboratorios, S.A. de C.V. .............         64          64          64
Aviser, S.A. de C.V. .............................        100         100         100
Campi Comercial, S.A. de C.V. ....................        100           -           -
Campi Alimentos, S.A. de C.V. ....................          -         100         100
</TABLE>

        In November 2004, the Company acquired all the shares of SECBA, S.A. de
C.V. from a related party for Ps. 13.9 million. As of the date of the
acquisition, the figures of SECBA, S.A. de C.V. have been consolidated with the
Company's figures. The excess of the purchase price paid over the book value of
this investment amounted to Ps. 0.3 million, which was recorded in other income.

        In December 2003, Campi Comercial, S.A. de C.V. merged into BSACV (the
surviving company). After the merger, a spin-off from BSACV was approved to
create a new company known as Campi Alimentos, S.A. de C.V. These transactions
have had no effect on the consolidated amounts on our balance sheet.

        In April 2002, we sold our subsidiary, SECBA, S.A. de C.V., for Ps. 5.6
million to a related party, generating a gain of Ps. 0.8 million; consequently,
this subsidiary's figures were not consolidated from the date of sale. The
effects of the deconsolidation of this subsidiary were immaterial and did not
affect the comparability of the accompanying financial statements. SECBA, S.A.
de C.V. continued to render administrative services to the Company.

PROPERTY, PLANTS AND EQUIPMENT

        Our production and storage facilities are located throughout the regions
we serve in order to ensure freshness and minimize transportation time and
costs. The most extensive facilities are grouped in seven complexes that include
farms and processing plants. The largest of our complexes is in Celaya, where we
have broiler grow-out farms, a broiler processing plant and egg production
farms. The complex at Culiacan includes broiler grow-out farms and a broiler
processing plant, as do the complexes located in Puebla, Lagos de Moreno,
Coatzacoalcos and Merida. There are smaller egg production farms at Los Mochis,
Ciudad Obregon and Mexicali. As a result of the acquisitions made in the second
half of 2001, a new complex was formed in Gomez Palacio, Durango (in La Laguna
Region). The complex consists of broiler grow-out farms, a broiler processing
plant and egg production farms representing more than half of our total egg
production capacity.

                                       25
<PAGE>

        The following table summarizes the types and number of each type of our
production facilities.

                          BACHOCO PRODUCTION FACILITIES

        TYPE                                                      NUMBER
        -----------------------------------------------------    -------
        Chicken breeding farms...............................        153
        Broiler grow-out farms...............................        428
        Broiler processing plants............................          7
        Egg incubation plants................................         17
        Egg production farms.................................        103
        Swine breeding farms.................................          1
        Swine grow-out farms.................................         11
        Feed plants..........................................         15

        On September 22, 2002, Hurricane Isidore hit the Yucatan Peninsula and
affected approximately 60% of our chicken growing farms in the region. The
remainder of our facilities in the area, including a poultry processing plant,
feed mills, breeder farms and incubator plants, suffered minor damages.

        The chicken growing farms in this region represent approximately 7% of
our total capacity in our chicken business. We were able to divert products from
our other facilities to maintain a consistent level of service to our customers
in this region.

        The Company repaired its Peninsula Complex on schedule and by the end of
2003 the complex had returned to the level of capacity maintained prior to
sustaining the damage caused by Hurricane Isidore. In 2003 the Company
implemented projects to expand the facilities at the Peninsula Complex as well
as the Northwest Complex. Both complexes were expanded to increase capacity by
approximately 50% by the third quarter of 2004. These projects were financed
with internal resources generated by our own operations.

        We currently operate 15 feed plants for our own chickens, feed sales to
third parties and egg and swine operations. The total production capacity of our
feed plants is approximately 325,000 tonnes per month. We estimate that we are
the largest producer of animal feed in Mexico.

        Our other facilities include two poultry manure-processing plants. Our
headquarters are located in Celaya, and we have 60 sales centers throughout the
regions we serve. While we own most of our facilities, we lease a limited number
of farms and sales centers. We also employ a network of contract growers.

        Our fleet of trucks carries feed from feed mills to farms, live chicken
from farms to processing plants, day-old chickens from egg incubation plants to
farms, eggs from farms to distribution centers and, ultimately, products from
distribution centers to customers.

ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS

        The following discussion should be read in conjunction with our
consolidated financial statements. The consolidated financial statements have
been prepared in accordance with Mexican GAAP, which differs in certain respects
from U.S. GAAP. Note 17 to the consolidated financial statements provides a
description of the principal differences between Mexican GAAP and U.S. GAAP, as
they relate to us, and a reconciliation to U.S. GAAP of total stockholders'
equity, net income and operating income, a consolidated statement of changes in
stockholders' equity and a condensed statement of cash flows under U.S. GAAP as
of December 31, 2003 and 2004 and for the years ended December 31, 2002, 2003
and 2004.

                                       26

<PAGE>

        In accordance with Mexican GAAP rules on price-level restatement of
financial statements, the financial statements included with this disclosure
recognize certain effects of inflation. In addition, the financial statements
and, unless otherwise specified, the other financial data included herein are
restated in constant pesos as of December 31, 2004. The effects of price-level
restatement in accordance with Mexican GAAP have not been reversed in the
reconciliation to U.S. GAAP.

GENERAL

        In the following discussion we describe various trends and how they
affected our results of operations for the years ended December 31, 2002, 2003
and 2004.

MEXICAN ECONOMIC CONDITIONS

        In 2001, according to statistics from the Mexican Central Bank and the
Secretaria de Hacienda y Credito Publico ("Ministry of Finance"), the Mexican
economy was affected by a global economic slowdown, and in particular by the
downturn in the U.S. economy in the aftermath of the terrorist attacks on
September 11, 2001. As a result, in 2001, Mexico's GDP fell by 0.3%. Interest
rates on 28-day Cetes decreased to an average of 11.3% (6.3% in the last month
of the year), inflation decreased to a rate of 4.4% and the peso appreciated
against the U.S. dollar by 5.0%.

        During 2002, the Mexican economy continued to be sluggish due to the
effects on Mexico of the continuing slowdown in the U.S. economy. Mexico's GDP
increased 0.9% in 2002. Financial markets in Mexico remained relatively stable
most of the year, experiencing an increase in volatility in the last quarter.
Interest rates on 28-day Cetes in 2002 decreased to an average of 7.3%,
inflation increased to a rate of 5.7% and the peso depreciated against the U.S.
dollar by 12.2%. Most of the peso depreciation occurred at the end of the year.

        In 2003, the Mexican economy continued to show signs of slowdown; GDP
growth was 1.3%, which was lower than initial expectations. Interest rates on
28-days Cetes decreased to an average of 6.23% and inflation decreased to a rate
of 4.0%, and the peso depreciated against the U.S. dollar by 7.3%.

        In 2004, the Mexican economy showed signs of recovery; GDP growth was
4.4%, which was better than initial expectations. Interest rates on 28-days
Cetes increased to an average of 6.82% for the year and an average of 8.50% in
the last month of the year. Inflation increased to a rate of 5.19%, and the peso
appreciated against the U.S. dollar by 0.8% at year end.

        In addition to the effects that the Mexican economy has on our business
and results of operations, Mexican political events may significantly affect our
operations and the performance of Mexican securities generally. See Item 3. "Key
Information - Risk Factors." A downturn in Mexico's economic conditions, civil
unrest or other adverse social, political or economic developments in or
affecting Mexico could adversely affect our business, results of operations,
financial condition, ability to obtain financing and prospects for future
business.

                                       27
<PAGE>

        The Mexican economy and financial and securities markets are, to varying
degrees, influenced by economic conditions in other countries. Economic or
financial conditions in one country or region may undermine investors'
confidence in other countries, such as Mexico, and decrease the attractiveness
of securities investments in such countries. See Item 3. "Key Information - Risk
Factors."

EFFECTS OF ECONOMIC CONDITIONS ON THE COMPANY

        Mexican economic conditions have had a strong impact on Mexico's chicken
market. Feed costs constitute a substantial portion of the cost of goods sold
and are priced with reference to U.S. dollars. In 2001, average producer prices
decreased 13.8% due to a decline in the worldwide cost of feed ingredients, and
a 6.7% increase in domestic supply and oversupply conditions. In 2002, average
producer prices increased slightly by 2.5% as a result of a global increase in
the cost of feed ingredients at the end of the year, partially offset by a
slowing economy. In 2003, average producer prices increased significantly by
10.6%, due primarily to an increase in raw materials prices during most of the
year.

        In 2004, average producer prices increased by 6.7%, due mainly to strong
increases in the cost of feed ingredients, in particular soybean meal, and a
moderate increase of supply in the Mexican market.

        We have a small part of our liabilities denominated in U.S. dollars. On
December 31, 2004, only 0.2% of our outstanding indebtedness of Ps.172.2 million
was denominated in U.S. dollars, as compared to 3.0% at December 31, 2003, (see
note 6 in our financial statements for details). We have assets and liabilities
denominated in U.S. dollars, so future depreciation or devaluation of the peso
against the U.S. dollar may result in foreign exchange losses or gains depending
on our net position. In 2004, we had foreign exchange gains of Ps.45.1 million
due to fluctuations of the peso against the U.S. dollar, as compared to a
foreign exchange gain of Ps.72.6 million in 2003 and a foreign exchange gain of
Ps.45.4 million in 2002.

        Any erosion of the purchasing power of Mexican consumers may adversely
affect demand for our products and, as a result, our net revenues and
profitability. Inflation and changing prices affect our ability to raise prices
as well as consumer demand, supplier prices and other costs and expenses,
consumer purchasing power and competitive factors, all of which in turn affect
our net revenues and operating results. Peso devaluations and high inflation
levels could further adversely affect our operations and financial position.

VOLUME OF CHICKEN SOLD

        The volume of our chicken sold increased over the previous year by 0.5%
in 2002, decreased by 1.5% in 2003, and increased 11.8% in 2004. The increase in
the volume of chicken sold in 2002 was mainly due to productivity improvements
made in our production facilities. Such increase, however, was partially offset
by the negative effects of Hurricane Isidore that temporarily shut down
production and resulted in damages and loss of product at our Peninsula Complex
during the last four months of 2002. The decrease in volume in 2003 was mainly
due to the effects of Hurricane Isidore on our Peninsula Complex during most of
2003. The increase in 2004 was due mainly to the completion of growing projects
in our Northwest and Peninsula complexes, and productivity improvements in the
rest of our operations.

                                       28
<PAGE>

TRENDS IN PRODUCT PRICES

        Our results of operations are significantly affected by the cyclical and
volatile nature of Mexican prices for chicken, feed, eggs and swine. During
2002, our chicken prices decreased 0.8% due to the downturn in demand in our
sales regions provoked by a slowing economy, stable cost of feed ingredients
throughout most of the year and continued changes in our product mix. In 2003,
the Company was affected by higher feed ingredient costs and oversupply
conditions due to an increase in domestic production. The continued weakness of
the Mexican economy affected the purchasing power of customers, and as a result
the Company was unable to increase its prices. During 2003, our chicken prices
decreased 2.7% primarily as a result of oversupply conditions in the domestic
chicken market as well as a decrease in consumer purchasing power. In 2004, our
chicken prices increased by 6.4%, mainly as a result of i) an increase in the
cost of our main feed ingredients which pushed the prices up in the industry,
ii) a moderate supply of chicken in the Mexican market, mainly in the second
part of the year and, iii) our commercial and marketing strategies.

        Prices for feed tend to follow trends in prices of feed ingredients,
which we discuss below.

        After a three-year decline, egg prices began to improve in 2003. Egg
prices declined in 2001 by 0.4% following the decline in the price of feed
ingredients, and in 2002 our egg prices continued to decline by 17.1%, due to
heavy oversupply conditions in the domestic egg market. In 2003, egg prices
increased by 17.5% mainly due to a reduced supply of this product in the market.
In 2004, our egg prices increased by 7.3%, mainly due to an increase in the
price of feed ingredients and a moderate supply during the first part of the
year in the Mexican market.

        Bachoco continues to work to improve its sales mix by introducing a
packaged product with brand identification with better profit margins.

        During 2002, our swine prices decreased by 21.3% as a result of an
oversupply in the swine market due primarily to increased import competition
from the United States. In 2003, swine prices began to recover, increasing by
7.0%, due mostly to the fact that there was very modest growth in domestic
production and imports. In 2004, our swine prices increased by 25.8%, mainly due
to a moderate supply in the Mexican market.

        We believe that, among other factors, industry price competition may
continue to exert downward pressure on real chicken prices, and that prices for
chicken, feed, eggs and swine are also likely to remain volatile and subject to
cyclical variation. Due to the time needed to complete the chicken growth cycle,
chicken producers generally cannot adjust production to respond immediately to
cyclical variations, and, accordingly, in times of oversupply, prices may
decline due to overproduction.

TRENDS IN PRICES OF FEED INGREDIENTS

        The single largest component of our cost of sales is the cost of
ingredients used to prepare feed, including sorghum, soybean meal, corn, fish
meal, meat meal and, for certain chicken products, marigold extract. The prices
of these feed ingredients are subject to significant volatility due to a number
of variables, including, among other factors, weather, harvest size,
transportation and storage costs, government agricultural policies and currency
exchange rates. The price at which we may obtain feed ingredients from Mexican
producers relative to U.S. producers is also subject to volatility depending on
these variables.

                                       29
<PAGE>

        At present, Mexican feed prices tend to parallel U.S. and international
prices. From 1996 through 1999, we increased the percentage of feed ingredients
that we obtained from Mexican producers. In 2000, however, this trend reversed
with the acquisition of Grupo Campi because the Grupo Campi complexes are
located in regions with low corn production, and consequently they must look to
international markets for most of their supply of feed ingredients. The
percentage of feed ingredients that we purchased from Mexican producers in 2001
remained approximately at the same level as in 2000. In 2001, approximately 40%
of grain, our main feed ingredient, came from local markets. In 2002, the
percentage of grain purchased from local markets fell to 30.1%, with the
remaining imported primarily from the United States. In 2003, the percentage of
grain purchased from domestic markets was 38.3%, and in 2004 it was
approximately 35.0%.

        Due to low inventories worldwide, at the end of 2003 and most of 2004,
soybean meal reached historically high prices worldwide; consequently, the price
of other sources of protein including grain, increased. As a result, the cost of
our feed increased substantially. It was not possible for us to pass these
increases to our customers, leading us to poor results during the first part of
the year. In the second part of the year, mainly in the last quarter, prices
resumed more normalized levels, allowing us to improve our results.

        In recent years, reductions in tariffs under NAFTA have generally
resulted in reductions of our costs of importing feed ingredients, except as
discussed above in 2004.

ACQUISITIONS & DISPOSITIONS

        Our operations have been affected during the periods we discuss herein,
by a series of acquisitions and production arrangements that we have made in
recent years.

        .    In February 2001, we entered into an agreement consisting of a
             lease of assets and a contract grower agreement with Avicola
             Cotaxtla, a large producer of broiler chicken.

        .    In the second half of 2001, we acquired two significant egg and
             chicken producers. These producers are Avicola Nochistongo, one of
             the 10 largest egg producers in Mexico operating within the Laguna
             region, and Avicola Simon Bolivar, one of the 15 largest egg
             producers and a producer of chicken.

        During 2002, such acquisitions and production agreements contributed to
the expansion and consolidation of our leadership position in the egg and
chicken industries in Mexico. Through these acquisitions, we expanded our
distribution network throughout almost the entire country and increased our
market presence in both La Laguna and the northeastern regions of Mexico. We
financed these acquisitions through our own working capital resources.

        As a result of these acquisitions and production agreements, our results
of operations in 2001 and 2002 reflect increasing volumes of chicken and egg
sales and increased cost of sales due to higher volumes and changes in product
mix. Changes in the product mix continued to increase cost of sales in 2003. The
integration of these operations and the changes in product mix has also resulted
in an increase in selling, general and administrative expenses over all periods.

        In April 2002, Secba, S.A. de C.V., a subsidiary of Industrias Bachoco,
S.A. de C.V., was sold for Ps.5.6 million to a related party generating a gain
of Ps.0.8 million, which is included in the consolidated financial statements
under the heading "Other income." We do not believe that this item materially
effects our financial statements or their comparability with previous years'
statements.

        During 2003, we implemented two important projects to expand the
facilities at our Northwest Complex and Peninsula Complex to increase production
capacity in our chicken business. These facilities are ideally suited for the
expansion projects due to their sanitary status and their geographical location.
Both complexes were expanded to increase capacity by approximately 50% and were
completed by the third quarter of 2004, which will increase opportunities for
future exports as well as for meeting consumer demand in those regions and in
other regions in Mexico. The new facilities in both complexes have been equipped
with the best technology available.

                                       30
<PAGE>

        In July 2004, we reached an agreement for renting the facilities of
UPAVAT and UPATEC, a small producer of table eggs in the state of Puebla, south
of Mexico City, with a annual capacity of about 0.75 million of lying hens.

        In November 2004, the Company acquired all the shares of SECBA, S.A. de
C.V. from a related party for Ps.13.9 million. The excess of the purchased price
paid over the book value of this investment amounted to Ps. 0.3 million, which
was recognized in other income.

SEASONALITY

        Our sales are moderately seasonal, with the highest levels of sales, in
general, in the second and fourth quarter due to higher chicken consumption
during the holiday season and lower sales levels earlier in the year during Lent
(particularly in the week prior to Easter).

SUMMARY OF RESULTS OF OPERATIONS

        The following table sets forth, selected components of our results of
operations as a percentage of net revenues for each of the periods indicated.

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                                  ----------------------------------
                                                                    2002         2003         2004
                                                                  --------     --------     --------
                                                                     (percentage of net revenues)
        <S>                                                          <C>          <C>          <C>
        Net revenues ..........................................        100%         100%         100%
        Cost of sales .........................................      (74.2)       (81.4)       (81.1)
        Gross profit ..........................................       25.8         18.7         18.9
        Operating income ......................................       12.0          4.0          6.4
        Comprehensive financing (cost) income .................        0.1          1.2         (0.5)
        Income tax, asset tax and employee profit sharing .....        1.8         (1.0)        (0.8)
        Net income ............................................       14.3          5.0          5.3
</TABLE>

        The following table sets forth, for each of the periods indicated, our
net revenues of chicken, feed, eggs, swine and other products as a percentage of
total net revenues in each period.

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                                  ----------------------------------
                                                                    2002         2003         2004
                                                                  --------     --------     --------
                                                                     (percentage of net revenues)
        <S>                                                           <C>          <C>         <C>
        Chicken ...............................................       81.0%        77.7%        78.5%
        Feed ..................................................        6.9%         7.1%         6.6%
        Eggs ..................................................        9.4%        11.1%        10.9%
        Swine .................................................        0.9%         0.9%         1.1%
        Other products ........................................        1.8%         3.2%         2.9%
                                                                  --------     --------     --------
        Total .................................................        100%         100%       100.0%
                                                                  ========     ========     ========
</TABLE>

                                       31
<PAGE>

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2004

GENERAL

        In 2004, the Mexican economy showed signs of recovery; GDP growth was
4.4%, which was better than initial expectations. The annual inflation increased
to a rate of 5.19%, and the Mexican peso appreciated against the U.S. dollar by
0.8% at year end.

        According to UNA, the production volume of the Mexican chicken industry
grew approximately 4.4% in 2004. This moderate increase in supply in the chicken
industry, combined with the improvement in the Mexican economy, and the increase
in the cost of main raw materials, resulted in an increase in chicken prices. As
the prices of our primary raw materials increased significantly, the cost of
sales of our main product lines increased impacting negatively operating income.

        With respect to the egg industry, domestic production increased by
almost 6.5%, which created oversupply conditions mainly at the end of the year.

        In spite of a significant increase in certain raw material prices, we
were able to increase our sales volume in all our main product lines; we market
our entire production, and had an operating margin of 6.4%.

NET REVENUES

        Consolidated net revenues during 2004 amounted to Ps.13.3 billion, an
increase of Ps.2.0 billion (or 17.6% in constant pesos) from Ps.11.3 billion in
2003. This increase was mostly due to increases in the sales of all our main
product lines, resulting from increases in volume and prices of those lines.

        Our chicken sales increased by 18.9%, due to an increase in price of
6.4% and in volume of 11.8%. The latter was brought on by our growth projects
that were launched last year, one in the Northwest and the other in the
Peninsula de Yucatan, in addition to productivity improvements in the rest of
the operations.

        Our revenues from egg increased by 14.9% in 2004, as a result of a 9.9%
price increase, and our sales volume increased of 4.5%. This increase in sales
volume was generated by productivity improvements, our growing project in our
Northwest Complex and the additional production we began in the Southeastern
region.

        Balanced-feed sales grew by 10.3% compared to 2003, mainly due to a 8.7%
price increase, and an increase in volume sold of 1.4%.

COST OF SALES

        The consolidated cost of sales in 2004 was Ps.10.8 billion, representing
an increase over 2003 of Ps.1.6 billion, or 17.2%. The rise in cost of sales
resulted primarily from increased volumes in all our main product lines and
increases in all our unit costs of sales.

        The increase in unit cost of sales was mostly due to a significant
increase worldwide in raw-material prices, including grain and soybean meal,
mainly during the first part of the year, which were partially offset by
improvements in productivity, mainly in our chicken and pork lines.

                                       32
<PAGE>

GROSS PROFIT

        Gross profit increased by 19.2%, from Ps.2.1 billion in 2003 to Ps.2.5
billion in 2004. As a percentage of net revenues, gross profit increased from
18.7% in 2003 to 18.9% in 2004. The increase in our gross profit and profit
margins resulted mainly from price increases in of our main business lines. Even
though the increase in the unit costs of our main raw materials was larger than
the increase in the unit prices of our main product lines, the overall unit cost
increase was lower than the price increase, due to productivity improvements.

SALES, GENERAL AND ADMINISTRATIVE EXPENSES

        Sales and administrative expenses in 2004 amounted to Ps.1.7 billion,
representing an increase of only 0.3% over 2003. The higher sales and
administrative expenses were principally due to higher sales volume partially
offset by lower administrative expenses. As a percentage of net revenues,
selling, general and administrative expenses decreased to 12.5% in 2004,
compared to 14.6% in 2003.

OPERATING INCOME

        Consolidated operating income in 2004 increased year-over-year by 87.8%
to Ps.853.7 million, as a result of the improvement in gross profit, while
keeping sales, general and administrative expenses at practically the same level
as 2003. As a percentage of net revenues, operating margin increased from 4.0%
in 2003 to 6.4% in 2004.

COMPREHENSIVE FINANCING INCOME (COST)

        Comprehensive financing income (cost) represents the net effect of
interest expense, interest income, foreign exchange gain (loss) and gain (loss)
on net monetary position, which arises from the effect of inflation on the
average net balance of monetary assets and liabilities. Comprehensive financing
income was Ps. 131.6 million in 2003 and we had a comprehensive financing cost
of Ps.71.5 million in 2004. The result in 2004 was due mainly to interest
expense and a negative result in monetary position, partially offset by
financial products and foreign exchange gains. The main difference in our 2004
result as compared with the result in 2003, was due to interest expenses from
Ps. 26.0 million in 2003 to Ps. 121.5 million in 2004, mainly due to interest
expenses and financial instruments used for purchasing of feed ingredients.

OTHER INCOME, NET

        Other income in both 2004 and 2003 was attributable mainly to sales of
used equipment, income from government support, cancellation of payments to
suppliers and miscellaneous services. It represented other income of Ps.30.9
million in 2004 as compared to other income of Ps.23.5 million in 2003. The
increase was mainly due to higher net income resulted from sales of used
equipment.

INCOME BEFORE PROVISION FOR INCOME TAX, ASSET TAX, EMPLOYEE PROFIT SHARING AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE

        Income before provision for income tax, asset tax, employee profit
sharing and cumulative effect of accounting change increased by 33.4% from
Ps.609.7 million in 2003 to Ps.813.1 million in 2004, due primarily to an
increase in operating income.

                                       33
<PAGE>

NET INCOME

        Majority Net income for 2004 increased by 24.8% to Ps.702.8 million
compared to 563.0 million in 2003. The increase was mainly due to better
operating results.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2003

GENERAL

        In 2003, Mexico's economy showed signs of slowdown. The Mexican GDP grew
only slightly by 1%. From December 31, 2002 to December 31, 2003, Mexico's
inflation rate reached 3.98%, and the peso-U.S. dollar exchange rate depreciated
by 7.3%. This depreciation occurred primarily in the second part of the year.

        According to UNA, the production volume of the Mexican chicken industry
grew approximately 5.4% in 2003. This increase in supply in the chicken
industry, combined with a sluggish economy, created an oversupply in chicken
products, which resulted in a decrease in chicken prices. Additionally, the
prices of our primary raw materials increased significantly, which increased the
cost of sales and negatively impacted operating income.

        These factors were not significantly offset by the fact that during
2003, Mexico imposed import limits and tariffs on chicken legs and thighs from
the United States, which will be in effect until December 31, 2007.

        With respect to the egg industry, conditions improved in 2003 compared
to 2002. Domestic production decreased by almost 4.1%, which helped reduce the
oversupply that existed during most of 2002.

        In spite of sluggish economic conditions, an oversupply in some of our
dominant product lines and a significant increase in certain raw material
prices, the Company was able to maintain most of its sales volume, market its
entire production, and have an operating margin of 4.0%.

NET REVENUES

        Consolidated net revenues during 2003 amounted to Ps.11.3 billion, a
slight decrease of Ps.19.5 million (or 0.17% in constant pesos) from Ps.11.3
billion in 2002. This decline was mostly due to the application of Bulletin E-1
and, to a lesser extent, the result of reduction in chicken sales, which was
only partially offset by increases in the sales from the other businesses. For a
discussion of Bulletin E-1, see Note 2 to the consolidated financial statements.

        Our chicken sales decreased by 4.2%, due mainly to price reduction and
slightly lower volumes. Chicken prices suffered a reduction as a result of an
excess of supply in the domestic market and the continued slowdown in the
Mexican economy, which affected the purchasing power of customers.

        Our revenues from eggs sales increased by 17.9% in 2003, as a result of
a 17.5% price increase; sales volume increased by 0.3%. This increase in sales
was due to a more stable supply during most of the year as a result of lower
domestic production.

        Balanced-feed sales grew by 2.2% compared to 2002, mainly due to a 4.9%
price increase that was partially offset by a slight reduction in volumes of
2.6%.

                                       34
<PAGE>

COST OF SALES

        The consolidated cost of sales in 2003 was Ps.9.2 billion, representing
an increase over 2002 of Ps.796.3 million, or 9.5%. The rise in cost of sales
resulted primarily from higher unit costs in chicken, which led to an increase
of Ps.560.3 million in the cost of chicken. The cost of eggs also increased by
Ps.66.1 million, while other lines and balanced feed had an increase in costs of
Ps.148.1 million and Ps.24.8 million, respectively. This was partially offset by
a reduction of Ps.3.1 million in cost of sales of swine.

        The increase in the cost of sales was mostly due to a significant
increase in raw material prices, including grain and soybean meal, during most
of the year. The cost of sales also increased as a result of an expansion of our
chicken product lines, which involve increased processing, and to a lesser
extent, to increased electricity and utility costs.

GROSS PROFIT

        Gross profit decreased by 27.9%, from Ps.2.9 billion in 2002 to Ps.2.1
billion in 2003. As a percentage of net revenues, gross profit decreased from
25.8% in 2002 to 18.7% in 2003. The decrease in our gross profit and profit
margins resulted mainly from price declines in chicken and the increase in cost
of sales of our main business lines.

SALES, GENERAL AND ADMINISTRATIVE EXPENSES

        Sales and administrative expenses in 2003 amounted to Ps.1.7 billion,
representing a Ps.88.0 million increase (or 5.6%) over 2002. The higher sales
and administrative expenses were principally due to higher sales volume and
increased distribution costs, in part because we increased our mix of product
lines toward more processed products which require greater administrative
resources and additional distribution expenses. As a percentage of net revenues,
selling, general and administrative expenses increased 14.6% in 2003, compared
to 13.8% in 2002.

OPERATING INCOME

        Consolidated operating income in 2003 decreased year-over-year by 66.5%
to Ps.454.6 million, as a result of the decrease in gross operating margin and
higher sales and administrative expenses. As a percentage of net revenues,
operating margin decreased from 12.0% in 2002 to 4.0% in 2003.

COMPREHENSIVE FINANCING INCOME (COST)

        Comprehensive financing income (cost) represents the net effect of
interest expense, interest income, foreign exchange gain (loss) and gain (loss)
on net monetary position, which arises from the effect of inflation on the
average net balance of monetary assets and liabilities. Comprehensive financing
income showed a gain of Ps.131.6 million in 2003, compared to a gain of Ps.15.7
million in 2002. The result in 2003 was due mainly to interest income and
foreign exchange gains, partially offset by a loss on net monetary position and
interest expense. The difference in our 2003 results as compared with the result
in 2002, were due mainly to an increase in interest income, from Ps. 118.2
million to Ps. 162.8 million, lower interest expenses from Ps. 34.3 million to
Ps. 26.0 million, foreign exchange gain from Ps. 45.4 million to Ps. 72.6
million and a lower result loss on our net monetary position.

                                       35
<PAGE>

OTHER INCOME (EXPENSE), NET

        Other income (expense) in both 2002 and 2003 was attributable to sales
of used equipment , income from government supports, income from insurances and
miscellaneous services. It represented other income of Ps.23.5 million in 2003
as compared to other income of Ps.44.2 million in 2002. The, decrease was mainly
due to the fact that in 2002 we received insurance proceeds for the damage
caused to our Peninsula Complex as a result of Hurricane Isidore that were
included in other income in 2002 and a larger income of sales of one day old
chick.

INCOME BEFORE PROVISION FOR INCOME TAX, ASSET TAX, EMPLOYEE PROFIT SHARING AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE

        Income before provision for income tax, asset tax, employee profit
sharing and cumulative effect of accounting change decreased by 57% from
Ps.1,418.4 million in 2002 to Ps.609.7 million in 2003, due primarily to a
decline in operating income.

NET INCOME

        Mayority net income for 2004 decreased by 65% to Ps.563.0 million
compared to Ps.1,617.1 million in 2002. The decrease was mainly due to the
reduction in our operating income in 2003, compensate in part by the aplication
of Bulletin E-1. For a discussion of Bulletin E-1, see Note 2 to the
consolidated financial statements.

INCOME TAX, ASSET TAX AND EMPLOYEE PROFIT SHARING

        For a more detailed discussion on this topic, please see note 13 of our
consolidated financial statements.

        We and each of our subsidiaries file individual tax returns and may be
subject to different tax regimes. Until December 31, 2001, BSACV, our principal
operating subsidiary, was subject to corporate income tax under the provisions
of the simplified statutory regime (the "Simplified Regime"), which was
applicable to a company engaged in agriculture and certain other activities that
derives no more than 10% of its net revenues from unrelated activities or from
the production of "processed" products, as defined in the statutory regime.

        On January 1, 2002, a new income tax law came into effect that
substantially modified the procedure for determining taxable income under the
simplified regime (the "New Simplified Regime"). Instead of determining income
tax solely based on certain types of transactions, such as dividend payments or
loans, the New Simplified Regime determines taxable income based on revenues
collected net of deductible expenses paid. This new tax base does not allow for
the deduction of the value of fixed assets as of December 31, 2001 or of
inventories existing as of December 31, 2001.

        The New Simplified Regime taxes corporate income at a rate of 35% for
2002, with a gradual yearly decrease of one percent, until the tax rate is
reduced to 32% in 2005; however, companies subject to the New Simplified Regime
also receive a 50% reduction on the above corporate rate.

        In December 2004, a reduction in the 33% income tax rate was approved,
so that the rate will be 30% in 2005, 29% in 2006 and 28% in 2007 and succeeding
years. As of January 1, 2005, the tax rate for taxpayers that pay income tax
under the new simplified regime will be determined by applying the reduction of
46.67% in 2005, 44.83% in 2006 and 42.86% in 2007 to the regular income tax
rates of 30%, 29% and 28% for each of the respective years, resulting in a fixed
rate of 16%. The effect of this tax rate reduction represented a credit to
results of operations of Ps 10.1 millions in 2004.

                                       36
<PAGE>

        In order to transition to the New Simplified Regime, companies paying
taxes under the old regime had to determine either the total amount of earnings
for fiscal years prior to January 1, 2002 on which taxes need to be paid or the
available tax loss carryforward. As a result of this requirement, our subsidiary
BSACV determined a tax loss carryforward of Ps.3,247.2 million, as of January 1,
2002. At December 31 2004, the Company had a Ps 217.5 million tax loss
carryforward.

        In addition to income tax, we, along with our subsidiaries, are also
subject to an alternative minimum tax known as "asset tax", which is assessed on
the average value of most assets, net of certain liabilities. The general asset
tax rate is 1.8%; BSACV is subject to a 0.9% rate pursuant to the New Simplified
Regime (unchanged from the Simplified Regime). We benefit from special rules
that exclude a number of assets from the asset tax and from tax incentives in
connection with certain of our investments. We (together with our subsidiaries)
are subject to asset tax if the amount of asset tax exceeds the computed income
tax liability. Asset tax can be credited against income tax in subsequent years
(up to ten years). As of December 31, 2004, we had asset tax payable in the
amount of Ps.12.7 million. We credited against this amount the income tax paid
(Ps.10.7 million).

        As of December 31, 2004, we had, at nominal value, Ps 7.7 million in
asset tax credits.

        In 2004, we recognized a total income tax and asset tax charge of
Ps.103.5 million, compared to a total income and asset tax charge of Ps.111.4
million in 2003, and a credit of Ps. 202.6 million in 2002.

        Neither Industrias Bachoco, S.A. de C.V. nor BSACV have employees, but
each of our other subsidiaries is required under Mexican law to pay employees,
in addition to their compensation and benefits, profit sharing in an aggregate
amount equal to 10% of such subsidiary's taxable income subject to certain
adjustments.

LIQUIDITY AND CAPITAL RESOURCES

        Our working capital (current assets less current liabilities) increased
year-over-year from Ps.3.5 billion on December 31, 2003 to Ps.3.8 billion on
December 31, 2004. We believe that our working capital is sufficient for our
present requirements. The ratio of current assets to current liabilities on
December 31, 2004 was 6.1, as compared to the ratio of 6.3 on December 31, 2003.
Cash and cash equivalents were Ps.2.3 billion at December 31, 2004, representing
an increase of Ps.687.4 million from the previous year primarily due to cash
generated by operations and lower capital expenditures than in 2003.

        Inventories were Ps.1.5 billion as of December 31, 2004, representing a
decrease of Ps.167.7 million from the previous year.

        Notes payable to banks, including the current portion of long-term debt,
equaled Ps.99.7 million as of December 31, 2004, an increase of Ps.38.6 million
from December 31, 2003.

        Stockholders' equity increased to Ps.10.9 billion on December 31, 2004
from Ps.10.6 billion on December 31, 2003.

                                       37
<PAGE>

        Long-term debt on December 31, 2004 represented 0.7% of our
capitalization, as compared to 0.9% on December 31, 2003.

        In 2004, capital investments amounted to Ps.438.2 million, all of which
were financed from resources generated from our own operations. These capital
investments were allocated mainly to renew the transportation fleet,
productivity projects and to finance internal growing capacity.

        We are a holding company with no significant operations of our own. We
will have distributable profits and cash to pay dividends only to the extent
that we receive dividends from our subsidiaries, principally BSACV. The amount
of dividends payable by our subsidiaries and us is also subject to general
limitations under Mexican corporate law.

        We expect to finance our capital expenditures and debt service
obligations from our current liquidity and capital resources, cash flows and
from additional borrowings from our existing sources of debt financing, although
we will also consider other sources of debt financing if they are available on
advantageous terms.

Our major categories of indebtedness included the following:

            .   Notes payable to banks: Short-term peso-denominated unsecured
                notes. As of December 31, 2004 we had Ps.75.4 million
                outstanding. At December 31, 2004 the weighted average interest
                rate on short-term notes payable was 4.9%.

            .   Long-term debt to banks: Peso-denominated secured debt and U.S.
                dollar-denominated unsecured debt. As of December 31, 2004 we
                had Ps.96.8 million outstanding maturing from 2005 to 2010. At
                December 31, 2004 the weighted average interest rate on
                long-term debt was 9.35%.

        The following table summarizes certain contractual liabilities as of
December 31, 2004. The table does not include short-term debt, accounts payable
or pension liabilities.

<TABLE>
<CAPTION>
                                                                PAYMENTS DUE BY PERIOD
                                               (millions of constant pesos as of December 31, 2004)
                                         ------------------------------------------------------------------
                                                        LESS THAN      1 TO 3        3 TO 5       5 OR MORE
       CONTRACTUAL OBLIGATIONS             TOTAL         1 YEAR         YEARS         YEARS         YEARS
-------------------------------------    ----------     ---------     ---------     ---------     ---------
<S>                                      <C>            <C>           <C>           <C>           <C>
Long-term debt.......................    Ps.   96.8     Ps.  24.3     Ps.  48.5     Ps.  11.8     Ps.  12.2
Operating leases.....................          98.9          28.6          49.5          12.8           8.0
                                         ----------     ---------     ---------     ---------     ---------
Total................................    Ps.  195.7     Ps.  52.9     Ps.  98.0     Ps.  24.6     Ps.  20.2
                                         ==========     =========     =========     =========     =========
</TABLE>

OFF-BALANCE SHEET ARRANGEMENTS

        We do not have any off-balance sheet arrangements of the type that we
are required to disclose under Item 5.E of Form 20-F.

RECONCILIATION TO U.S. GAAP

        The principal differences between Mexican GAAP and U.S. GAAP, as they
relate to us, concern (i) deferred income taxes, (ii) capitalization of
financing costs, (iii) biological assets and agricultural products valuation at
fair value, (iv) the amortization of goodwill (see Note 17 to the consolidated
financial statements for a detailed description). Each of these differences also
affects our balance sheet.

                                       38
<PAGE>

        Our consolidated net income under U.S. GAAP was Ps.1,638.2 million in
2002, Ps.529.2 million in 2003 and Ps.740.3 million in 2004, compared to
Ps.1,619.3 million, Ps.567.5 million and Ps.706.6 million, respectively, under
Mexican GAAP. For further explanation, please see Note 17 to the consolidated
financial statements.

USE OF ESTIMATES IN CERTAIN ACCOUNTING POLICIES

        In preparing our financial statements, we make estimates concerning a
variety of matters. Some of these matters are highly uncertain, and the
estimates involve judgments based on the information available to us. The
discussion below identifies matters for which the financial presentation would
be materially affected (a) if we relied on different estimates that we could
reasonably use, or (b) if in the future we change our estimates in response to
changes that are reasonably likely to occur.

        The discussion below addresses only those estimates that we consider
most important based on the degree of uncertainty and the likelihood of a
material impact if we used a different estimate. There are many other areas in
which we use estimates about uncertain matters, but the reasonably likely effect
of changed or different estimates would not be material to our financial
presentation.

ESTIMATED USEFUL LIVES OF PROPERTY, PLANT AND EQUIPMENT

        We estimate the useful lives of our property, plant and equipment in
order to determine the amount of depreciation expense to be recorded in each
period. The current estimates of useful lives are based on estimates made by an
independent appraiser in 1996. Those estimates have been adjusted when
applicable, based on historical experience with similar assets that we own.
Comprehensive financing cost related to the construction of assets is
capitalized and then amortized over the estimated useful lives of the assets.
Accumulated depreciation expense for property, plant and equipment in 2004
amounted to Ps.4,922.1 million. As applied to our 2004 financial results, the
depreciation was Ps.420.3 million, or 3.16% of our net revenues. For further
explanation, see Notes 2 and 4 to the consolidated financial statements.

ALLOWANCE FOR PRODUCTIVITY DECLINES

        In estimating the inventory value of our breeder birds, swine and
layers, we make allowances for productivity declines. We estimate such
allowances based on expected future production and deduct them from inventories.
The estimates of future production are based on standards for the breeder line
and the performance of the most recent flocks. We refer to the standards
provided by the company that sells us the breeder line in question. Each company
that sells breeder lines publishes its own particular standards for its
proprietary breeder line.

INVENTORY VALUATION

Prior to the adoption of Bulletin E-1 on January 1, 2003, for Mexican GAAP
purposes, our inventories are valued using market prices.

According to Bulletin E-1, biological assets and agricultural products (the
latter at the time of their harvesting) are to be valued at their fair value,
net of estimated costs at point of sale.

The Bulletin also establishes that whenever the fair value cannot be determined
in a reliable, verifiable and objective manner, the assets are to be valued at
their production cost, net of accumulated impairment.

                                       39
<PAGE>

Poultry being fattened (with less than 6.5 weeks old), incubatable eggs for
fattening, pigs and laying hens, are valued at production cost since it is not
possible to determine their fair value in a reliable, verifiable and objective
manner.

Poultry being fattened from age 6.5 weeks to the time birds are ready for sale,
is valued at fair value net of estimated costs at point of sale, considering the
sales price per kilogram of processed chicken at the date of valuation.

Laying hens are depreciated based on eggs produced using an estimated factor for
productive useful life.

Processed chicken and commercial eggs, are valued at their fair value net of
costs at point of sale, considering the sales price per kilogram of processed
chicken and commercial eggs at the time such items are considered agricultural
products, from this date, the valuation is considered to be cost up to the time
of sale, not in excess of net realizable value.

For more detail, see "Inventories and biological assets" in Note 3 and Note 2 p
to the consolidated financial statements.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

We periodically and systematically review the aging and collection of our
accounts receivable. As a result of this procedure, we set up an allowance for
doubtful accounts of Ps. 35.1 millions, in 2004 that represents 0.3% of our
total annual sales. See Note 2e of our Audited Financial Statements. The
estimates are based on information available and focusing on expected trends and
estimated default rates, identification of potential problems and exposure to
major customers.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS

        The board of directors is responsible for the management of our
business. The board of directors consists of an odd number of directors, never
less than five, and corresponding alternate directors, each of whom is elected
for a term of one year. The holders of Series B Shares may elect directors and
alternate directors at a general ordinary stockholders' meeting. The holders of
Series L Shares have the right to appoint or elect two directors and two
alternate directors to the board of directors.

        Alternate directors elected by the holders of Series B Shares are
authorized to serve on the board of directors in place of directors who are
unable to attend meetings or otherwise participate in the activities of the
board of directors. Likewise, alternate directors appointed or elected by the
holders of Series L Shares are authorized to serve on the board of directors in
place of directors appointed or elected by the holders of Series L Shares who
are unable to attend meetings or otherwise participate in the activities of the
board of directors.

        The following table identifies our directors, alternate directors,
Honorary Chairman of the board and Secretary of the board as of June 20, 2005,
their positions and their years of service.

                                       40
<PAGE>

<TABLE>
<CAPTION>
                                                                                         YEARS AS
NAME                                             POSITION                                DIRECTOR
----------------------------------------------   -------------------------------------   --------
<S>                                              <C>                                        <C>
Enrique Robinson Bours Almada.................   Honorary Chairman of the board             51
Francisco Javier R. Bours Castelo.............   Chairman of the board and Proprietary
                                                 Director                                   23
Mario Javier Robinson Bours Almada............   Proprietary Director                       51
Juan Bautista Salvador Robinson Bours.........   Proprietary Director                       51
Arturo Bours Griffith.........................   Proprietary Director                       11
Jose Eduardo Robinson Bours Castelo...........   Alternate Director                         11
Jesus Enrique Robinson Bours Munoz............   Proprietary Director                       11
Juan Salvador Robinson Bours Martinez.........   Alternate Director                         11
Jose Francisco Bours Griffith.................   Alternate Director                         11
Guillermo Pineda Cruz.........................   Alternate Independent Director             11
Ricardo Aguirre Borboa........................   Independent Director                       11
Cristobal Mondragon Fragoso...................   Secretary of the board                      9
Avelino Fernandez Salido......................   Independent Director                        2
Octavio Robinson Bours Griffith...............   Proprietary Director                        8
Humberto Schwarzbeck Noriega..................   Independent Director                        2
Jesus Rodolfo Robinson Bours Munoz............   Proprietary Director                        3
</TABLE>

        Enrique Robinson Bours, Mario Javier Robinson Bours and Juan Bautista
Salvador Robinson Bours are brothers. Francisco Javier R. Bours Castelo and Jose
Eduardo Robinson Bours Castelo are sons of Mario Javier Robinson Bours. Arturo
Bours Griffith, Jose Francisco Bours Griffith and Octavio Robinson Bours are
nephews of Enrique Robinson Bours, Mario Javier Robinson Bours and Juan Bautista
Salvador Robinson Bours. Jesus Enrique Robinson Bours Munoz and Jesus Rodolfo
Robinson Bours Munoz are sons of Enrique Robinson Bours. Juan Salvador Robinson
Bours Martinez is the son of Juan Bautista Salvador Robinson Bours. Guillermo
Pineda Cruz is the son-in-law of Enrique Robinson Bours, and Ricardo Aguirre
Borboa is the son-in-law of Juan Bautista Salvador Robinson Bours.

        Our bylaws provide for the creation of an executive committee of the
board of directors, which may exercise certain of the board's powers in full,
subject to certain limitations. Our stockholders elect members of the executive
committee for one-year terms. In 2004, there were four members of the executive
committee: Francisco Javier R. Bours Castelo, Jesus Enrique Robinson Bours
Munoz, Arturo Bours Griffith and Juan Salvador Robinson Bours Martinez.

        In April 2002, we announced the retirement of Mr. Enrique Robinson Bours
Almada, Chairman of the board and co-founder of the Company. Mr. Bours led
Industrias Bachoco S. A. de C.V. for 50 years. The board named as his successor
Mr. Javier Robinson Bours Castelo, Mr. Enrique Robinson Bours's nephew. Mr.
Bours Castelo has been at Bachoco for 23 years as a member of the board and
served as Vice-Chairman for nine years. Mr. Bours Castelo was named Chairman of
the board in 2002.

                                       41
<PAGE>

        In order to fully comply with current Mexican Corporate and Securities
Market Laws as well as other recent regulatory amendments in the various markets
in which Bachoco's shares are traded, we appointed a new board of directors at
our ordinary stockholder meeting held on April 30, 2003. We ratified our board
of directors at our stockholder meeting held on April 27, 2005. Our board, as of
June 20, 2005, is composed of the following members:

        Proprietary Directors:
        ----------------------
        Francisco Javier R. Bours Castelo (Chairman of the board of directors)
        Mario Javier Robinson Bours Almada
        Juan Bautista S. Robinson Bours Almada
        Jesus Enrique Robinson Bours Munoz
        Jesus Rodolfo Robinson Bours Munoz
        Arturo Bours Griffith
        Octavio Robinson Bours Griffith

        Alternate Directors:
        --------------------
        Jose Eduardo Robinson Bours Castelo
        Juan Salvador Robinson Bours Martinez
        Jose Francisco Bours Griffith

        Independent Directors:
        ----------------------
        Ricardo Aguirre Borboa
        Avelino Fernandez Salido
        Humberto Schwarzbeck Noriega

        Alternate Independent Director:
        -------------------------------
        Guillermo Pineda Cruz

        Francisco Javier R. Bours Castelo, Chairman of the board of directors,
has been a member of the board for 23 years, and has been Chairman since April
2002. Before that, he was Vice-Chairman for several years. Mr. Bours holds a
degree in Civil Engineering from the Instituto Tecnologico y de Estudios
Superiores Monterrey (ITESM). He currently serves as Chairman of the boards of
directors of the following companies: Grupo Megacable, S.A. de C.V., Congeladora
Horticola, S.A. de C.V., Inmobiliaria of Trento S.A. de C.V., Acuicola Boca S.A.
de C.V., Agriexport S.A. de C.V., Taxis Aereos del Noroeste S.A. de C.V.,
Industrias Boca, S.A. de C.V., Promotora Empresarial del Noroeste, S.A. de C.V.,
Sonora Spa Resort, S.A. de C.V., among others.

        Mario Javier Robinson Bours Almada, Proprietary Director, has been a
member of the board for 51 years, and is a co-founder of Industrias Bachoco S.A.
de C.V.

        Juan Bautista S. Robinson Bours Almada, Proprietary Director, has been a
member of the board for 51 years and is a co-founder of Industrias Bachoco S.A.
de C.V.

        Jesus Enrique Robinson Bours Munoz, Proprietary Director, has been a
member of the board for 11 years, having previously served as Production
Director and Divisional Manager. Mr. Robinson Bours holds a degree in
Engineering from the University of Arizona. He is also a member of the board of
directors of San Luis Corporacion S.A. de C.V., and Megacable S.A. de C.V. He
has spent his entire career in the agricultural sector.

        Jesus Rodolfo Robinson Bours Munoz, Proprietary Director, has been a
member of the board for three years. Mr. Robinson Bours previously served in the
Company as Production Manager in the Northwest and Bajio divisions, Commercial
Manager in Northwest Division and Purchasing Manager at the Bajio Division. Mr.
Robinson Bours holds a degree in Agricultural Engineering from the University of
Arizona. He has business experience in agriculture and raising livestock with
Agricola Monte Cristo S.A. de C.V., Agricola Rio Yaqui S.P.R. de R.L., Agricola
Nacapul S.P.R. de R.L. and Ganadera Cocorena S.P.R. de R.L.

        Arturo Bours Griffith, Proprietary Director, has been a member of the
board for 11 years. Mr. Bours Griffith completed professional studies at the
University of Arizona, he is also chairman of the board of Qualyplast, S.A. de
C.V., and a member of the board of Megacable, S.A. de C.V., Promotora
Empresarial del Noroeste, S.A. de C.V., Taxis Aereos del Noroeste, S.A. de C.V.,
among others.

                                       42
<PAGE>

        Octavio Robinson Bours Griffith, Proprietary Director, has been a member
of the board for eight years. Mr. Robinson Bours holds a degree in Agricultural
Engineering from the Instituto Tecnologico y de Estudios Superiores de Monterrey
(ITESM). He has experience in producing swine, and is also member of the board
of Choya, S.A. de C.V., and Granos Santa Fe, S.A. de C.V..

        Jose Eduardo Robinson Bours Castelo, Alternate Director, has been a
member of the board for 11 years. Mr. Robinson Bours holds a degree in
Industrial Engineering from the Instituto Tecnologico y de Estudios Superiores
de Monterrey (ITESM). He was previously Commercial Director of Industrias
Bachoco, a Senator of the Mexican Congress and is currently governor of the
state of Sonora.

        Juan Salvador Robinson Bours Martinez, Alternate Director, has been a
member of the board for 11 years, and has served Bachoco as Purchasing Manager.
Mr. Robinson Bours holds a degree in Industrial Engineering from the Instituto
Tecnologico y de Estudios Superiores de Monterrey (ITESM). His other
appointments include Chairman of the board and CEO of Llantas y Accesorios, S.A.
de C.V.

        Jose Francisco Robinson Bours Griffith, Alternate Director, has been a
member of the board for 11 years. He holds a degree in Civil Engineering from
the Universidad Autonoma de Guadalajara. Mr. Robinson Bours has worked at
Bachoco as Engineering Manager, and is currently dedicated to agricultural
operations.

        Ricardo Aguirre Borboa, Independent Director, has been a member of the
board for 11 years. He is also a member of the board of directors of the
newspaper El Debate and he holds a degree in Agricultural Engineering from the
Instituto Tecnologico y de Estudios Superiores Monterrey (ITESM). He has
experience in agriculture and pork production. Mr. Aguirre Borboa is also member
of the board of Gasolinera Servicios del Valle del Fuerte S.A. de C.V.,
Periodico el Debate de los Mochis, Tepeyac Produce, Inc. among others.

        Avelino Fernandez Salido, Independent Director, was named a member of
the board on April 30, 2003. He is also a member of the board of Banco Nacional
de Mexico, BBVA Bancomer, and Banca Serfin. His business experience is in the
marketing of grains.

        Humberto Schwarzbeck Noriega, Independent Director, was named a member
of the board on April 30, 2003.He holds a degree in economics from the Instituto
Tecnologico y de Estudios Superiores de Monterrey. He is currently CEO of Yeso
Industrial de Navojoa S.A. de C.V. a private company dedicated to production of
plaster for the construction industry and Chief of the Board of Promotora de
Manufacturas S.A. de C.V., a private company dedicated to production of
automotive parts.

        Guillermo Pineda Cruz, Alternate Independent Director, has been a member
of the board for 11 years. He is also a member of the board of directors of
Banamex and was a regional member of the board of directors of Grupo Financiero
Serfin, Inverlat and Invermexico. He holds several appointments in public
interest organizations, including President of the board of directors of Cajeme
2020 AC since 2000, President of the board of directors of Cruz Roja Mexicana en
Ciudad Obregon (1997-2001). Mr. Pineda holds a degree in Civil Engineering from
the Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM) and a
master's degree in Business Administration from the Instituto Tecnologico y de
Estudios Superiores de Sonora (ITSON). He co-founded Edificadora Pi-Bo, S.A. de
C.V. in 1983, and is its President and CEO.

        At the ordinary annual stockholders' meeting held on April 27, 2005 all
of the members of the board were ratified in their charges. Mr. Cristobal
Mondragon Fragoso was confirmed as Secretary of the board of directors and Mr.
Felizardo Gastelum Felix was appointed the Company's statutory auditor.

                                       43
<PAGE>

EXECUTIVE OFFICERS

Our executive officers as of December 31, 2004 are set forth in the table below.

NAME                                        POSITION                      AGE
----                                        --------                      ---
Cristobal Mondragon Fragoso.............    Chief Executive Officer        59
Daniel Salazar Ferrer...................    Chief Financial Officer        40
David Gastelum Cazares..................    Director of Marketing          53
Jose Luis Lopez Lepe....................    Director of Personnel          57
Rodolfo Ramos Arvizu....................    Director of Production         47
Ernesto Salmon Castelo..................    Director of Industries         43
Francisco Javier Espinoza Teja..........    Director of Supply Chain       37

        Cristobal Mondragon Fragoso, Chief Executive Officer, joined us in 1982
and assumed his current position in 2001. Previously, Mr. Mondragon served as
Administration Manager, as Manager of Corporate Finance and as Chief Financial
Officer. Before joining us, Mr. Mondragon worked as an accountant for three
years. Later he joined La Hacienda, S.A. de C.V. where he held the positions of
Auditor, Accountant, Head of Processing Systems, Audit Manager, Administration
Manager and Comptroller. Mr. Mondragon holds an Accounting degree from
Universidad Nacional Autonoma de Mexico (UNAM).

        Daniel Salazar Ferrer, Chief Financial Officer, joined us in 2000 and
assumed his current position in January 2003. Previously Mr. Salazar worked for
four years as Chief Financial Officer at Grupo Covarrubias and as Comptroller at
Negromex, a company of Grupo Desc. Mr. Salazar holds an Accounting degree from
Universidad Tecnologica de Mexico and a master's degree in Business
Administration from Instituto Tecnologico de Estudios Superiores de Monterrey
(ITESM).

        David Gastelum Cazares, Director of Marketing, joined us in 1979 and
assumed his current position in 1992. Previously, Mr. Gastelum served as a
pullet salesman in the states of Sonora and Sinaloa, National Sales Manager of
Live Animals and Eggs, Manager of the Northwest Division, Manager of the Mexico
City Division and National Sales Manager. Before joining us, Mr. Gastelum worked
at La Hacienda, S.A. de C.V. as Technical Advisor and as Area Officer for the
Southeast Division. Mr. Gastelum holds a degree in Veterinary Medicine from the
school of Veterinary of Medicine of Universidad Nacional Autonoma de Mexico
(UNAM).

        Jose Luis Lopez Lepe, Director of Personnel, joined us in 1993.
Previously, Mr. Lopez worked as a teacher in several institutions as well as
with Grupo Condumex, where he was Director of Personnel. Mr. Lopez holds a
degree in Physics and Chemistry from the Escuela Normal Superior and a degree in
Business Administration from Instituto Tecnologico Autonomo de Mexico.

        Rodolfo Ramos Arvizu, Technical Director, joined us in 1980. Previously,
Mr. Ramos held positions in the Egg Quality Control Training Program and in
Poultry Management as well as serving as Supervisor of the Commercial Egg
Production Training Program, Manager of Raw Material Purchasing and as a
Director of Production. Mr. Ramos holds a degree in Agricultural Engineering
from Instituto Tecnologico de Estudios Superiores de Monterrey (ITESM).

        Ernesto Salmon Castelo, Director of Industries, joined us in 1991 and
assumed his current position in 2000. Previously, Mr. Salmon worked for Gamesa,
S.A. de C.V. and for us as Sales Manager in Sonora, Northwestern Distribution
Manager, Manager of the Processing Plant in Celaya, Southeastern Division
Manager and Bajio Division Manager. Mr. Salmon holds a degree in Chemical
Engineering from Instituto Tecnologico de Sonora and a master's degree in
Business Administration from Instituto Tecnologico de Estudios Superiores de
Monterrey (ITESM).

                                       44
<PAGE>

        Francisco Javier Espinoza Teja, Director of Supply Chain, joined us in
2004. Previously, Mr. Espinoza worked at Procter & Gamble and at the Coca-Cola
Company in Mexico. He holds a Chemical Engineering degree from the Universidad
Autonoma de Guadalajara and a master's degree in International Finance from
Instituto Tecnologico de Estudios Superiores de Monterrey (ITESM).

STATUTORY AUDITOR

        The statutory auditor generally reviews our affairs and reports to the
stockholders at the ordinary general meeting as to the accuracy of the financial
information presented to them by the board of directors. The statutory auditor
is also authorized to do the following:

        (i)     call ordinary or extraordinary stockholders' meetings;

        (ii)    place items on the agenda for meetings of stockholders or the
                board of directors;

        (iii)   attend meetings of stockholders or the board of directors
                (without the right to vote); and

        (iv)    request monthly reports from the board of directors regarding
                our financial condition, including statements of results of
                operations.

As of December 31, 2003, Francisco Jose Sanchez Gonzalez was the statutory
auditor. In April 2004, Felizardo Gastelum Felix replaced him as statutory
auditor.

AUDIT COMMITTEE

        In January 2001, a Mexican Commission of Business Leaders (Consejo
Coordinador Empresarial), with the support of the Comision Nacional Bancaria y
de Valores (Mexican Banking and Securities Commission, or, "CNBV"), issued a
Codigo de Mejores Practicas Corporativas ("Code of Best Practices") for publicly
traded Mexican companies, recommending certain actions with respect to various
areas of corporate governance. Subsequently, the Securities Market Law was
amended effective June 2001, to require that all publicly traded Mexican
companies have an audit committee.

        The mandate of the audit committee is to establish and monitor
procedures and controls in order to ensure that the financial information we
distribute is useful, appropriate and reliable and accurately reflects our
financial position. In particular, pursuant to our bylaws and Mexican law, the
audit committee must do the following:

        (a)     Submit an annual report to the board of directors;

        (b)     Provide the board of directors with its opinion regarding any
                transaction with a related party that is outside the ordinary
                course of our business (the board is required to seek the audit
                committee's opinion on such matters); and

        (c)     Assist the board of directors in selecting candidates for
                auditor and reviewing the scope and terms of the auditor's
                engagement.

                                       45
<PAGE>

        In order to fully comply with current Mexican Corporate and Securities
Market Laws as well as other recent regulatory amendments in the various markets
in which Bachoco's shares are traded, we named an audit committee during our
annual ordinary stockholders' meeting on April 30, 2003. The audit committee is
currently comprised of the following four members:

        Ricardo Aguirre Borboa (President)
        Francisco Javier R. Bours Castelo
        Avelino Fernandez Salido
        Humberto Schwarzbeck Noriega

        This committee was named during our annual ordinary stockholders'
meeting held on April 28, 2004, and ratified on our annual ordinary
stockholders' meeting held on April 27,2005. Francisco Javier R. Bours Castelo,
represents the controlling shareholders and has no voting rights in the audit
committee.

COMPENSATION OF DIRECTORS AND OFFICERS

        For the year ended December 31, 2004, we paid approximately Ps.23.2
million in aggregate compensation to our directors and executive officers, for
services they rendered in their respective capacities.

BOARD PRACTICES

        In 2001, we began to review our board practices to bring them into
compliance with the recent requirements for companies listed on the Mexican
Stock Exchange. As a result of this review, we have changed the composition of
our board and appointed an audit committee. See "Directors" and "Audit
Committee."

EMPLOYEES

        As of December 31, 2002, 2003 and 2004, we had approximately 18,306;
18,495 and 18,896 employees, respectively.

        In 2004, approximately 62% of employees were members of labor unions.
Labor relations with our employees are governed by 52 separate collective labor
agreements, each relating to a different group of employees and negotiated on
behalf of each such group by a different labor union. As is typical in Mexico,
wages are renegotiated every year while other terms and conditions of employment
are renegotiated every two years. We seek to attract dependable and responsible
employees to train at each of our plants and facilities. We offer our employees
attractive salary and benefit packages, including a pension and savings plan.

        We believe that we have good relations with our employees. We have not
experienced significant work stoppages as a result of labor problems.

SHARE OWNERSHIP

        To the best of our knowledge, no individual director or managers holds
share ownership of more than one percent of any of the class Shares subject to
this report. At this time, we have not developed a share options plan for our
employees.

                                       46
<PAGE>

COMPARISON OF OUR CORPORATE GOVERNANCE RULES AND THE RULES OF THE NYSE
APPLICABLE TO U.S. COMPANIES

        On November 4, 2003, the SEC approved the final corporate governance
rules of the NYSE. According to such rules, foreign private issuers are subject
to a more limited set of requirements regarding corporate governance than those
imposed on U.S. domestic issuers. As a foreign private issuer, we must comply
with three rules imposed by the NYSE:

        .    prior to July 31, 2005, we must comply with the requirements set
             forth by the SEC concerning audit committees;

        .    our CEO must promptly notify the NYSE in writing after any
             executive officer becomes aware of any material non-compliance with
             any of the applicable NYSE corporate governance rules; and

        .    we shall provide a brief description disclosing any significant
             ways in which our corporate governance practices differ from those
             followed by U.S. companies under NYSE listing standards.

        A brief description disclosing the significant ways in which our
        corporate governance practices differ from those followed by U.S.
        companies under NYSE listing standards is available in our webpage
        www.bachoco.com.mx/english/inversionistas/corporate.asp.

ITEM 7. MAJOR STOCKHOLDERS AND RELATED PARTY TRANSACTIONS.

        Our Common Stock consists of 450,000,000 Series B Shares and 150,000,000
Series L Shares. Holders of Series B Shares are entitled to one vote at any
general meeting of our stockholders for each Series B Share held. Holders of
Series L Shares are entitled to one vote for each Series L Share held, but only
with respect to certain matters. Each Unit consists of one Series B Share and
one Series L Share. Each B Unit consists of two Series B Shares. As of December
31, 2004, 91.3% of our Series B and 74.0% of our Series L, shares were held in
Mexico.

        In April 1995, the Robinson Bours Stockholders created the Control Trust
to hold certain Units owned by members of the Robinson Bours family. The
Robinson Bours Stockholders, through the Control Trust and a separate trust
established in connection with our 1997 initial public offering (the "Family
Trust"), owned Units and B Units representing approximately 65.5% of the Series
L Shares and 88.5% of the Series B Shares outstanding on December 31, 2004. In
total, the Control Trust and the Family Trust owned 496,500,000 Shares
outstanding on December 31, 2004.

        The table below sets forth certain information regarding the direct or
indirect ownership of outstanding Shares by the Control Trust and the Family
Trust as of December 31, 2004.

                                       47
<PAGE>

<TABLE>
<CAPTION>
TITLE OF CLASS             IDENTITY OF GROUP           AMOUNT OWNED     PERCENT OF CLASS
---------------     ------------------------------     ------------     ----------------
<S>                 <C>                                 <C>                  <C>
Series B(1)         Control Trust and Family Trust      398,250,000          88.5%

Series L(2)         Control Trust and Family Trust       98,250,000          65.5%

All Classes(3)      Control Trust and Family Trust      496,500,000          82.8%
</TABLE>

----------
(1)  Percentage is based on 450,000,000 Series B Shares, including 300,000,000
     Shares not registered under Section 12 of the Securities and Exchange Act
     of 1934.
(2)  Percentage is based on 150,000,000 Series L Shares.
(3)  Percentage is based on 600,000,000 Shares.

        Apart from the ownership set forth in the table above, at the end of
April 2005, Fidelity Low Priced Stock Fund and Fidelity Management & Research
Co. own 5.03% each of our Common Stock.

        In November 1998, in accordance with rules established by the CNBV, we
established a reserve in the amount of Ps.180.0 million (Ps.272.4 million in
constant pesos as of December 31, 2004 purchasing power) for the repurchase of
shares. We may repurchase our shares in the Mexican Stock Exchange at prevailing
prices to the extent of the balance remaining in the reserve account or up to 3%
of the total shares outstanding. Any shares so repurchased will not be deemed to
be outstanding for purposes of calculating a quorum or for voting at any
stockholders' meeting during the time that we own the shares. During our
stockholders' meeting of April 27, 2005, we capped the share repurchase program
for 2005 to a maximum amount of Ps.162.0 million, equivalent to approximately
6.0 million units (or 1.0 million ADS). As of May 15, 2005, we had repurchased
no Units.

INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

        It is our policy not to engage in any transaction with or for the
benefit of any stockholder or member of the board of directors, or any entity
controlled by such a person or in which such a person has a substantial economic
interest, unless (i) the transaction is related to our business and (ii) the
price and other terms are at least as favorable to us as those that could be
obtained on an arm's-length basis from a third party.

        We have engaged in a variety of transactions with entities owned by
members of the Robinson Bours family, all of which we believe were consistent
with this policy and not material to our business and results of operations. All
of these transactions are described below. See Note 8 to the consolidated
financial statements. We expect to engage in similar transactions in the future.

        We regularly purchase vehicles and related equipment from distributors
owned by various members of the Robinson Bours family. The total amount spent on
such purchases was Ps.52.6 million, Ps.49.8 million and Ps.37.8 million for the
years ended December 31, 2002, 2003 and 2004, respectively. The distribution of
vehicles and related equipment is a highly competitive aspect of business in the
areas in which we operate. We are not dependent on affiliated distributors and
are able to ensure that the pricing and service we obtain from affiliated
distributors are competitive with those available from other suppliers.

        The Robinson Bours Stockholders own Taxis Aereos del Noroeste, S.A. de
C.V. ("TAN"), an air transport company that provides transportation for members
of the board of directors to and from meetings at our headquarters in Celaya. We
paid TAN Ps.3.7 million, Ps.4.8 million and Ps.2.7 million for the years ended
December 31, 2002, 2003 and 2004, respectively, for such transportation.

                                       48
<PAGE>

        We purchased feed and packaging materials from enterprises owned by the
family of Enrique Robinson Bours and the family of Juan Bautista Robinson Bours.
The cost of such purchases was Ps.107.1 million, Ps.161.1 million and Ps.196.0
million for the years ended December 31, 2002, 2003 and 2004, respectively.

        Our accounts payable to related parties totaled Ps.2.6 million and
Ps.6.1 million as of ended December 31, 2003 and 2004, respectively. These
transactions took place among companies owned by the same set of stockholders.
See Note 8 to the consolidated financial statements.

        In November 2004, the Company acquired all the shares of SECBA, S.A. de
C.V. from a related party for Ps. 13.9 million. As of the date of the
acquisition, the figures of SECBA, S.A. de C.V. have been consolidated with the
Company's figures. The excess of the purchase price paid over the book value of
this investment amounted to Ps. 0.3 million, which was recorded in other income.

        In April 2002, we sold our subsidiary, SECBA, S.A. de C.V., for Ps. 5.6
million to a related party, generating a gain of Ps. 0.8 million; consequently,
this subsidiary's figures were not consolidated from the date of sale. The
effects of the deconsolidation of this subsidiary were immaterial and did not
affect the comparability of the accompanying financial statements. SECBA, S.A.
de C.V. continued to render administrative services to the Company.

        Neither we nor our subsidiaries have loaned any money to any of our
directors or officers.

ITEM 8. FINANCIAL INFORMATION

        Our consolidated financial statements are included in Item 18. The
financial statements were audited by an independent registered public accounting
firm, auditor and are accompanied by an audit report.

        The financial statements include a consolidated balance sheet,
consolidated statements of income, consolidated statements of changes in
stockholders' equity, consolidated statements of changes in financial position
and Notes relating to the consolidated financial statements.

        The consolidated financial statements have been prepared in accordance
with Mexican GAAP, which differs in certain respects from U.S. GAAP. Note 17 to
the consolidated financial statements provides a description of the principal
differences between Mexican GAAP and U.S. GAAP as they relate to us and a
reconciliation to U.S. GAAP of total stockholders' equity, operating income and
net income, a consolidated statement of changes in stockholders' equity and a
condensed cash flow statement under U.S. GAAP as of December 31, 2003 and 2004,
and for the years ended December 31, 2002, 2003 and 2004.

LEGAL PROCEEDINGS

        We are a party to certain legal proceedings in the ordinary course of
our business. We believe that none of these proceedings, individually or in the
aggregate, is likely to have a material adverse effect on us.

DIVIDENDS POLICY

        Pursuant to Mexican law and our bylaws, the declaration, amount and
payment of annual dividends are determined by a majority vote of the holders of
Series B Shares, generally but not necessarily on the recommendation of the
board of directors. Holders of Series L Shares are not entitled to vote with
respect to the declaration of dividends.

                                       49
<PAGE>

        We declared and paid dividends in nominal pesos of Ps.267.8 million in
2002, Ps.297.7 million in 2003 and Ps.238.9 million in 2004.

        Although there can be no assurance as to the amount or timing of future
dividends, we expect to pay an annual dividend pro rata to holders of
outstanding Shares in an amount up to approximately 20% of the prior year's net
income. The declaration and payment of dividends will depend on our results of
operations, financial condition, cash requirements, future prospects and other
factors deemed relevant by the board of directors and the holders of Series B
Shares, including debt instruments which may limit our ability to pay dividends.

        Because we are a holding company with no significant operations of our
own, we will have distributable profits and cash to pay dividends only to the
extent that we receive dividends from our subsidiaries, principally BSACV.
Accordingly, there can be no assurance that we will pay dividends or of the
amount of any such dividends. BSACV, our principal operating subsidiary, could,
in the future, enter into loan agreements containing covenants whose terms limit
its ability to pay dividends under certain circumstances.

        Mexican law requires that 5% of our net income each year (after profit
sharing and other deductions required by Mexican law) be allocated to a legal
reserve fund until such fund reaches an amount equal to at least 20% of our
capital stock. Mexican corporations may pay dividends only out of earnings
(including retained earnings after all losses have been absorbed or paid up) and
only after such allocation to the legal reserve fund. The level of earnings
available for the payment of dividends is determined under Mexican GAAP.

SIGNIFICANT CHANGES IN ACCOUNTING PRACTICES

        Treatment of Biological Assets

        Prior to the adoption to bulletin E-1, on January 1, 2003, the Company
adopted the requirements of the new Bulletin E-1 under Mexican GAAP. The
Bulletin changes the way biological assets, including animals like chicken and
swine, are treated under Mexican GAAP. Starting in January 2003, changes in the
fair market value of these assets must be included as a potential profit in a
company's financial statements before they are harvested. We have to estimate
the potential profit for these animals at a reasonable market price minus
expected costs and operating expenses. That estimate may be higher or lower than
the actual profits realized. The effect of Bulletin E-1 may be positive or
negative for any particular period, depending on the price and inventories of
animals in that period. For a more detailed description please see Note 2-p and
Note 3 in our Consolidated Audited Financial Statements.

        Business acquisitions

        In May 2004, the Mexican Institute issued Mexican accounting Bulletin
B-7, Business Acquisitions. The observance of Bulletin B-7 is mandatory for
fiscal years beginning on or after January 1, 2005, although earlier observance
is recommended. Bulletin B-7 addresses the financial accounting and reporting
for business and entity acquisitions and requires that all business combinations
be accounted for using only the purchase method. Bulletin B-7 also eliminates
the amortization of goodwill and provides specific rules related to the
acquisition of minority interest and to the transfer of net assets or exchange
of equity interests between entities under common control. We believe that the
adoption of this accounting pronouncement will increase the Company's net income
in 2005 by Ps 17.5 million, derived from the elimination of goodwill
amortization.

                                       50
<PAGE>

        Financial instruments

        In April 2004, the Mexican Institute amended Mexican accounting Bulletin
C-2, Financial Instruments. The amendments establish that changes in the fair
value of instruments classified as available for sale be disclosed in the
holder's stockholders' equity. The amended Bulletin C-2 also provides the
requirements and rules for the accounting treatment of transfers between
financial asset categories. The amendments are also more precise in establishing
the guidelines for the accounting treatment to be given to impairment in the
fair value of financial instruments. Furthermore, the amended bulletin requires
that such instruments be classified as either short-term or long-term and
clarifies the rules for presenting in the statement of changes in financial
position changes associated with the purchase, sale and maturity of financial
instruments. Finally, the amendments broaden the disclosure rules established
under Bulletin C-2.

The observance of the amendments to Bulletin C-2 is mandatory for fiscal years
beginning on or after January 1, 2005, although earlier observance is permitted.
We do not believe the adoption of this new accounting requirement will have a
material effect on the Company's financial position or on its results of
operations.

        Accounting for derivative instruments and hedging activities

        In April 2004, the Mexican Institute issued Bulletin C-10, Accounting
for Derivative Instruments and Hedging Activities. Bulletin C-10 establishes the
defining characteristics that financial instruments must have to be considered
derivatives, as well as the conditions that must be met for specifically
designating derivatives as hedges. Bulletin C-10 also provides guidelines for
assessing the effectiveness of hedging derivatives and the rules for their
valuation and the accounting for changes in their fair value. Finally, this
bulletin provides guidelines for disclosing and presenting hedges in the
financial statements. We do not believe the adoption of this new accounting
requirement will have a material effect on the Company's financial position or
on its results of operations.

        Labor Obligations

        In January 2004, the Mexican Institute issued the revised accounting
Bulletin D-3, Labor Obligations. The revised bulletin establishes the overall
rules for the valuation, presentation and disclosure of so-called "other
post-retirement benefits and the reduction and early extinguishment of such
benefits", thus nullifying the provisions of Circular 50. Bulletin D-3 also
provides rules applicable to employee termination pay. The observance of these
new rules is mandatory for fiscal years beginning on or after January 1, 2005.
We do not believe the adoption of this new accounting requirement will have a
material effect on the Company's financial position or on its results of
operations.

ITEM 9. THE OFFER AND LISTING

        The Units (each comprised of one Series B Share and one Series L Share)
are listed on the Mexican Stock Exchange, and the American Depositary Shares
("ADSs," each comprised of six Units) are listed on the New York Stock Exchange.
The ADSs are evidenced by American Depositary Receipts ("ADRs") issued by The
Bank of New York, as Depositary under a Deposit Agreement among the Company, the
Depositary and the holders from time to time of ADRs. On December 31, 2003,
there were 6,495,012 ADSs outstanding, representing 8.7% of the outstanding
Series B Shares and 26.0% of the outstanding Series L Shares, which were held by
five holders (including the Depositary Trust Company) with registered addresses
in the United States.

                                       51
<PAGE>

        The Units and the ADSs commenced trading on September 19, 1997. The
following tables set forth for each year from 2000 to 2004, for each quarter
from 2003 and 2004 and for each complete month from December 2004 to May 2005,
the high, low and period end sales prices of the Units on the Mexican Stock
Exchange as reported by the Mexican Stock Exchange and the high, low and period
end sales price of the ADSs on the New York Stock Exchange as reported by the
New York Stock Exchange.

                             MEXICAN STOCK EXCHANGE
                            (Nominal pesos per Unit)

                 YEAR                         HIGH         LOW         CLOSE
----------------------------------------   ----------   ----------   ----------
2000 ...................................        16.06         9.51        10.19
2001 ...................................        13.00         8.17        11.10
2002 ...................................        16.00        10.98        14.50
2003 ...................................        19.30        14.00        18.90
2004 ...................................        26.70        17.00        26.20

                             NEW YORK STOCK EXCHANGE
                                 (U.S.$ per ADS)

                 YEAR                         HIGH         LOW         CLOSE
----------------------------------------   ----------   ----------   ----------
2000 ...................................        10.75         6.50         7.06
2001 ...................................         8.60         5.45         7.35
2002 ...................................        10.00         7.15         8.52
2003 ...................................        10.78         7.73        10.45
2004 ...................................        14.19         8.80        14.19

                             MEXICAN STOCK EXCHANGE
                            (Nominal pesos per Unit)

               PERIOD                         HIGH         LOW         CLOSE
----------------------------------------   ----------   ----------   ----------
First Quarter 2003 .....................        14.80        14.00        14.70
Second Quarter 2003 ....................        17.50        14.70        17.09
Third Quarter 2003 .....................        17.40        16.40        16.90
Fourth Quarter 2003 ....................        19.30        17.30        18.90
First Quarter 2004 .....................        24.00        19.45        21.30
Second Quarter 2004 ....................        21.50        17.00        18.75
Third Quarter 2004 .....................        21.50        18.00        21.50
Fourth Quarter 2004 ....................        26.70        21.50        26.20

                             NEW YORK STOCK EXCHANGE
                                 (U.S.$ per ADS)

               PERIOD                         HIGH         LOW         CLOSE
----------------------------------------   ----------   ----------   ----------
First Quarter 2003 .....................         8.85         7.74         8.05
Second Quarter 2003 ....................        10.90         9.20        10.35
Third Quarter 2003 .....................        10.40         9.60         9.95
Fourth Quarter 2003 ....................        10.71         9.40        10.30
First Quarter 2004 .....................        13.28        10.64        11.40
Second Quarter 2004 ....................        11.45         8.80        10.00
Third Quarter 2004 .....................        11.41         9.75        11.41
Fourth Quarter 2004 ....................        14.19        10.86        14.19

                                       52
<PAGE>

                             MEXICAN STOCK EXCHANGE
                            (Nominal pesos per Unit)

                MONTH                         HIGH         LOW         CLOSE
----------------------------------------   ----------   ----------   ----------
December 2004 ..........................        26.20        24.00        26.20
January 2005 ...........................        27.00        24.45        25.20
February 2005 ..........................        28.00        24.45        27.55
March 2005 .............................        28.00        26.00        27.00
April 2005 .............................        28.50        27.00        28.50
May 2005 ...............................        29.60        27.50        28.00

                             NEW YORK STOCK EXCHANGE
                                 (U.S.$ per ADS)

               PERIOD                         HIGH         LOW         CLOSE
----------------------------------------   ----------   ----------   ----------
December 2004 ..........................        14.19        13.31        14.19
January 2005 ...........................        14.60        12.87        13.01
February 2005 ..........................        15.20        13.43        15.11
March 2005 .............................        15.25        13.99        14.70
April 2005 .............................        16.00        14.40        14.70
May 2005 ...............................        16.21        15.41        15.60

TRADING ON THE MEXICAN STOCK EXCHANGE

        The Mexican Stock Exchange, located in Mexico City, is the only stock
exchange in Mexico. Founded in 1894, the Mexican Stock Exchange is organized as
a corporation whose shares are held by brokerage houses, which are currently the
only entities allowed to own them. These brokerage houses are currently the only
entities authorized to trade on the floor of the Mexican Stock Exchange. Trading
on the Mexican Stock Exchange takes place principally through an automated
inter-dealer quotation system known as SENTRA, which is open for trading between
the hours of 8:30 a.m. and 3:00 p.m., Mexico City time, each business day. Each
trading day is divided into six trading sessions with ten-minute periods
separating each session. Trades in securities listed on the Mexican Stock
Exchange can, subject to certain requirements, also be realized off the
Exchange. Due primarily to Mexican tax considerations, however, most
transactions in listed securities are effected through the Exchange. The Mexican
Stock Exchange operates a system of automatic suspension of trading in shares of
a particular issuer as a means of controlling excessive price volatility, but
under current regulations this system does not apply to securities such as the
Units that are directly or indirectly (for example, through ADSs) quoted on a
stock exchange outside Mexico.

        Settlement is effected two business days after a share transaction on
the Mexican Stock Exchange. Deferred settlement, even by mutual agreement, is
not permitted without the approval of the CNBV. Most securities traded on the
Mexican Stock Exchange are on deposit with S.D. Indeval, S.A. de C.V.,
Institucion para el Deposito de Valores (Central Securities Depository for the
Mexican Securities Market, or, "Indeval"), a privately-owned central securities
depositary that acts as a clearing house, depositary, custodian and registrar
for Mexican Stock Exchange transactions, eliminating the need for physical
transfer of securities.

        The Mexican Stock Exchange is one of Latin America's largest exchanges
in terms of market capitalization, but it remains relatively small and illiquid
compared to major world markets and is therefore subject to greater volatility.
There is no formal over-the-counter market for securities in Mexico.

        The market value of securities of Mexican companies is, to varying
degrees, affected by economic and market conditions in other emerging market
countries.

                                       53
<PAGE>

MARKET REGULATION

        The predecessor of the CNBV was established in 1946 to regulate stock
market activity. The Ley del Mercado de Valores ("Securities Market Law") of
1975, as amended, regulates the securities markets and brokerage houses and sets
standards for the registration of brokers in the Intermediaries Section of the
Registro Nacional de Valores e Intermediarios (National Registry of Securities
and Intermediaries, or, "RNVI"), a prerequisite to becoming a member of the
Mexican Stock Exchange. Prior to registration in the RNVI, the brokerage houses
must be authorized by the Ministry of Finance upon the recommendation of the
CNBV. Legislative provisions under NAFTA allow foreign securities firms in a
NAFTA country to establish and control brokerage firms in Mexico. There are
several foreign brokerage houses authorized to operate in Mexico. In addition, a
number of other foreign brokerage firms have submitted preliminary applications
to be authorized to operate in the Mexican Stock Exchange. The Securities Market
Law also empowers the CNBV to regulate the public offering and trading of
securities. The governing committee of the CNBV is composed of representatives
of the Ministry of Finance, the Mexican Central Bank, the Comision Nacional de
Seguros y Fianzas ("National Insurance and Bonding Commission"), the Comision
Nacional del Sistema de Ahorro para el Retiro ("National Retirement Savings Fund
Commission") and the CNBV.

        Under the Mexican Securities Market Law, the CNBV must be notified
before stockholders of a company listed on the Mexican Stock Exchange effect one
or more simultaneous or successive transactions resulting in the transfer of 10%
or more of such company's capital stock. The holders of the shares being
transferred in the transactions are also obligated to inform the CNBV of the
results of the transactions within three days of completion of the last
transaction, or that the transactions have not been completed. The CNBV will
notify the Mexican Stock Exchange of such transactions, without specifying the
names of the parties involved.

        The CNBV and the Mexican Stock Exchange must also be notified in the
event of any of the following contingencies:

        .    on the following day of operation if any stockholder of a company
             listed on the Mexican Stock Exchange effects one or more
             transactions resulting in the ownership of more than 10% and less
             of 30% of capital stock;

        .    on the following day of operation if any Related Person increases
             his ownership of the stock of a company; and

        .    at least 15 days before the operation becomes effective if any
             stockholder of a company listed on the Mexican Stock Exchange,
             undertakes in a Public Offering one or more transactions resulting
             in the ownership of more than 30% and less than 50% of capital
             stock.

ITEM 10. ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF ASSOCIATION

        Information regarding the memorandum and articles of association was
included in the Initial Registration Form F-1, submitted on September 1997. In
April 2002, we made changes to our bylaws, which were reported in our annual
report for year 2002. In December 2003 we made further changes; the majority of
which are summarized below. Aside from these changes, the information contained
in the Initial Registration Form F-1 is applicable to this Annual Report.

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        The discussion set forth below contains information concerning our
capital stock and a brief summary of the material provisions of the bylaws and
applicable Mexican law. This summary does not purport to be complete and is
qualified in its entirety by reference to the bylaws and the applicable
provisions of Mexican law.

GENERAL

        Industrias Bachoco, S.A. de C.V., was incorporated on April 17, 1980, as
a variable capital corporation (sociedad anonima de capital variable) under the
laws of Mexico.

        In 1995, our stockholders authorized the issuance of up to 15,525,000
additional Series B Shares and 15,525,000 additional Series L Shares, all
constituting fixed capital, to be issued in connection with the global offering
of shares that took place on September 19, 1997 (the "Global Offering").

        On April 21, 1997 we restructured our capital by (i) declaring a
four-to-one stock split of the 106,678,125 Series B Shares and 35,559,375 Series
L Shares outstanding, (ii) converting 7,762,500 Series L Shares (on a post-split
basis) into Series B Shares and (iii) combining all of the 434,475,000 Series B
Shares and 134,475,000 Series L Shares outstanding (in each case, on a
post-split basis) into 134,475,000 Units and 150,000,000 B Units. Each Unit
consists of one Series B Share and one Series L Share. Holders of Units will be
entitled to exercise all the rights of holders of the Series B Shares and Series
L Shares underlying their Units. Each B Unit consists of two Series B Shares. B
Units entitle the holders thereof to exercise all the rights of holders of the
Series B Shares underlying such B Units. Immediately prior to the Global
Offering, our outstanding capital stock consisted of 434,475,000 Series B Shares
and 134,475,000 Series L Shares, all of which were duly authorized, validly
issued and are fully paid and non-assessable.

        For a period of 10 years after the Global Offering, the Series B Shares
will be issuable only in the form of Units and B Units, and the Series L Shares
will be issuable only in the form of Units. Commencing 10 years from the date of
the Global Offering, Units will automatically separate into their component
Series B Shares and Series L Shares, B Units will automatically separate into
their component Series B Shares, and each Series L Share underlying the Units
will automatically convert into one Series B Share.

        The Series B Shares generally will represent at least 75% of our Common
Stock and will have full voting rights. See "--Foreign Investment Legislation."
The Series L Shares may not represent more than 25% of our capital stock. As
further described below, the Series B Shares and the Series L Shares have the
same economic rights. Each Series B Share entitles the holder thereof to one
vote at any general meeting of the stockholders. The Series L Shares are
entitled to vote only with respect to certain limited matters as described under
"--Voting Rights and Stockholders' Meetings."

        The Robinson Bours Stockholders have advised us that they intend to
ensure that the Control Trust will hold at least 51% of the Series B Shares at
any time outstanding. See "--Foreign Investment Legislation."

REGISTRATION AND TRANSFER

        The Units and B Units are evidenced by certificates in registered form,
which may have dividend coupons attached. We maintain a registry and, in
accordance with Mexican law, we recognize as stockholders only those holders
listed in the stock registry. Stockholders may hold their Units or B Units in
the form of physical certificates (which, together with notations made in our
stock registry, evidence ownership of the Units and B Units) or through book
entries with institutions that have accounts with Indeval. Indeval is the holder
of record in respect of Units and B Units held through it. Accounts may be
maintained at Indeval by brokerage houses, banks and other entities approved by
the CNBV. Ownership of Units and B Units maintained at Indeval is evidenced
through Indeval's records and through lists kept by Indeval participants. See
"Description of American Depositary Receipts."

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<PAGE>

        In accordance with Article 130 of the Ley General de Sociedades
Mercantiles ("Mexican Companies Law"), the board of directors must authorize any
transfer of stock, or any securities based on such stock, when the number of
shares sought to be transferred in one act or a succession of acts, without
limit of time or from one group of interrelated stockholders or stockholders who
act in concert, constitutes 10% or more of the voting stock issued by the
Company. If the board of directors refuses to authorize such a transfer, the
board must designate one or more purchasers of the stock, who must pay the
interested party the prevailing price on the Mexican Stock Exchange. If the
shares are not registered with Indeval the price will be determined in
accordance with Article 130 of the Mexican Companies Law. If any person
participates in a transaction that would have resulted in the acquisition of 10%
or more voting stock of the Company without having obtained the board's prior
approval they must pay the Company a fine equal to the market value of the
shares.

        Any person who participates in an act that violate the terms of Article
130 discussed in the preceding paragraph will be obligated to pay the Company a
fine in an amount equal to the value of the shares owned directly or indirectly
by the stockholder, or the value of the shares involved in the prohibited
transaction, if such person does not own shares issued by the Company. In the
case of a prohibited transaction that would have result in the acquisition of
10% or more of the voting stock of the Company, the fine will be equal to the
market value of those shares, provided that board authorization was not obtained
in advance.

        According to our bylaws, a majority of the members of the board of
directors must authorize in writing, by a resolution made at a board of
directors' meeting, any change in the control of the Company. Our board of
directors has the right to decide if a person or a group of persons is acting
for the purpose of acquiring control of the Company.

VOTING RIGHTS AND STOCKHOLDERS' MEETINGS

        Each Series B Share entitles the holder thereof to one vote at any
general meeting of the stockholders. Holders of Series B Shares are currently
entitled to elect all members of the board of directors, with the exception of
those members that holders of Series L Shares are entitled to elect. Our bylaws
provide that the board of directors shall consist of at least 5 members, which
minimum number may be decreased at an extraordinary general meeting of
stockholders by majority vote of the holders of Series B Shares. At year-end
2002, the board of directors consisted of 15 members. Our board was reformed in
April 2003, and now consists of seven proprietary Directors and three
independent Directors. The stockholders also appointed four alternate directors
to the board of directors, three of whom are proprietary and one of whom is
independent.

        Each Series L Share entitles the holder thereof to the following rights:

        (i)     the rights described below with respect to the appointment or
                election of up to two directors;

        (ii)    one vote at a special stockholders' meeting with respect to the
                cancellation of the registration of the Series L Shares with the
                RNVI or with any Mexican or foreign stock exchange; and

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<PAGE>

         (iii)  one vote at an extraordinary general stockholders' meeting with
                respect to the following matters only:

                (a) transformation of the Company from one type of corporate
                    form to another;

                (b) any merger of the Company with another company where we are
                    not the surviving entity;

                (c) cancellation of the registration of the Shares with the RNVI
                    or in any Mexican or foreign stock exchange; and

                (d) amendment to the controlling stockholders' obligation under
                    the bylaws to repurchase Shares and certain other provisions
                    in the event of delisting.

        Holders of Series L Shares are not entitled to attend or to address
stockholders' meetings at which they are not entitled to vote.

        Under Mexican law, the holders of Shares of any series are also entitled
to vote at a special meeting on any action that would prejudice the rights of
such holders, and such a holder would be entitled to judicial relief against any
such action taken without the approval of holders at such a meeting. Special
meetings are meetings called by holders of a certain series, like the L Series,
in order to reach a consensus on an issue or issues prior to an extraordinary
meeting. Any determination that an action does not require a vote at a special
meeting would be subject to judicial challenge by an affected stockholder, and a
Mexican court of competent jurisdiction would determine whether the challenged
action required a vote at a special meeting. Mexican law does not provide
extensive guidance on the criteria to be applied in making such a determination.

        General stockholders' meetings may be ordinary or extraordinary
meetings. Extraordinary general meetings are meetings called to consider the
matters specified in Article 182 of the Mexican Companies Law and the bylaws
including changes in the fixed portion of the capital stock and other amendments
to the bylaws, liquidation, merger, transformation from one type of corporate
form to another, change in nationality, change of corporate purpose and those
other matters on which the holders of the Series L Shares are entitled to vote.
General meetings called to consider all other matters, including election of
directors and the statutory auditor, are ordinary meetings. An ordinary general
meeting of the Company must be held at least annually during the four months
following the end of the preceding fiscal year to consider certain matters
specified in Article 181 of the Mexican Companies Law, including, principally,
the election of directors and the statutory auditor, the approval of the report
of the board of directors regarding their company's performance, the company's
financial statements for the preceding fiscal year and the allocation of the
profits and losses of the preceding year.

        Any holder or group of holders of Series L Shares representing 10% or
more of our outstanding capital stock has the right to appoint one member and
one alternate member of the board of directors by written notice delivered to
the Chairman or the Secretary of the board at least two days prior to the date
of a general stockholders' meeting to be held for the election of directors. If
no directors are so appointed, holders of Series L Shares are entitled to vote
at a special stockholders' meeting to elect two members and two alternate
members of the board of directors; similarly, if only one director is so
appointed, holders of Series L Shares are entitled to vote at a special
stockholders' meeting to elect one additional member and one alternate member of
the board of directors. The holders of Series L Shares can only revoke the
appointment of a member of the board that they elected, but only if the
appointment of all the other members of the board is also revoked. Other than
the Robinson Bours Stockholders, no person or persons own Series L Shares
representing 10% or more of our outstanding capital stock.

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<PAGE>

        Under our bylaws, the quorum on first call for a general ordinary
meeting is at least 50% of the outstanding Series B Shares, and action may be
taken by a majority of the Series B Shares present. If a quorum is not available
on first call, a second meeting may be called at which action may be taken by a
majority of the Series B Shares present, regardless of the number of such
shares. The quorum on first call for a general extraordinary meeting or a
special meeting is 75% of the outstanding Shares with voting rights on the
matters to be addressed in that meeting. If a quorum is not available on first
call, a second meeting may be called, provided that at least 50% of the
outstanding Shares with voting rights on the matters to be addressed in that
meeting are represented.

        Whether on first or subsequent call, adoption of a resolution at a
general extraordinary meeting requires the favorable vote of the holders of at
least 50% of the outstanding Shares with voting rights on the matters to be
addressed by that extraordinary meeting. In addition, any action taken at an
extraordinary general meeting, on first or subsequent call, at which holders of
Series L Shares are entitled to vote, requires the favorable vote of the holders
of the majority of the outstanding Series B Shares voting separately as a class,
and any action taken at an extraordinary general meeting, on first or subsequent
call, with respect to the cancellation of the registration of the Series L
Shares with the RNVI or with any Mexican or foreign stock exchange, requires the
favorable vote of the holders of Series L Shares at a special meeting. Whether
on a first or subsequent call, for a special meeting to take action, the
favorable vote of at least 50% of the outstanding Shares of the corresponding
Series is required; provided, however, that special meetings of holders of
Series L Shares which are called to elect and remove directors and to vote with
respect to the cancellation of the registration of the Series L Shares with the
RNVI or with any Mexican or foreign stock exchange do not have a quorum
requirement and action may be taken by a majority of the Series L Shares
present, regardless of the number of such shares.

        Our bylaws require the approval of holders of at least 95% of the
outstanding Shares and the approval of the CNBV for the amendment of the
controlling stockholders' obligation under the bylaws to repurchase Shares and
certain other provisions in the event of delisting. See "--Other
Provisions--Repurchase in the Event of Delisting."

        Holders of ADRs are entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the Series B Shares and the Series L
Shares constituting the Units represented by the ADSs. See "Description of
American Depositary Receipts--Voting of Deposited Securities."

        According to our bylaws, stockholders with a right to vote, including a
limited right to vote, who hold at least 10% of the shares represented in a
stockholders' meeting, may ask to postpone a vote on any matters on which they
believe they do not have enough information as defined by Article 199 of the
Mexican Companies Law. Stockholders with a right to vote, including a limited
right to vote, who hold at least 20% of the capital stock, may legally object to
the decisions of a general stockholder's meeting, with respect to matters in
which they have rights, as defined by Articles 201 and 202 of the Mexican
Companies Law.

        In addition, stockholders with or without a right to vote, representing
at least 10% of the stockholders equity, can appoint a commissary. They can
revoke the commissary they appointed, but only when all others commissaries are
revoked.

        The board of directors, the Chairman of the board of directors, the
Secretary of the board of directors, the statutory auditor or any Mexican court
of competent jurisdiction may call a stockholders' meeting. The board of
directors or the statutory auditor may be required to call a meeting of
stockholders by holders of at least 10% of the Series B Shares or, in the case
of a stockholders' meeting at which holders of Series L Shares would be entitled
to vote, by the holders of at least 10% of our outstanding capital stock. In
addition, the board of directors or the statutory auditor must call a
stockholders' meeting at the written request of any holder of Series B Shares if
no ordinary general stockholders' meeting has been held for two consecutive
years or if in any meetings held during such a period the stockholders have not
considered the items mentioned in Article 181 of the Mexican Companies Law,
discussed above.

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        The board of directors or the statutory auditor must call a
stockholders' meeting at the written request of any holder of Series L Shares if
no ordinary general stockholders' meeting has been held for two consecutive
years for the election of directors. In the event that a meeting is not called
within 15 days following the date of such a request, a Mexican court may require
such meeting to be called. At least 15 days prior to the meeting, notice of the
meeting must be published in the Diario Oficial de la Federacion ("Official
Gazette") or in a newspaper of general circulation in Mexico City. Stockholders'
meetings may be held without such publication provided that 100.0% of the
outstanding Shares with voting rights on the matters to be addressed by such
meeting are represented.

        From the moment that a call for a stockholders' meeting is made public,
all the information related to the meeting must be available to the
stockholders. In order to attend a stockholders' meeting, a stockholder must
request and obtain an admission card by furnishing, at least 24 hours before the
time set for holding the stockholders' meeting, appropriate evidence of
ownership of Shares in us and depositing such Shares with our corporate
secretary or with an institution authorized to accept such deposit. If so
entitled to attend the meeting, a stockholder may be represented by proxy signed
before two witnesses. Additionally, the stockholder may be represented at the
stockholders' meetings by a person named by proxy, on a printed form that we
issue, which, under Mexican law, must identify our company and indicate clearly
the matters to be addressed in the meeting, with enough space for the
instructions that the stockholder specifies. We are obliged to make information
on the upcoming meeting available to the intermediaries in the stock market, for
the time specified in Article 173 of the Mexican Law, in order to give the
intermediaries time to send it to the stockholders they represent. The Secretary
of the board of directors must verify that this requirement is met and report on
this matter at the stockholders meeting. See "--Registration and Transfer."

MEMBERS OF THE BOARD

        Under the Mexican Companies Law, a board of directors must conform to
the following requirements:

        (i)     The board must have at least five and no more than 20
                proprietary directors;

        (ii)    For every member of the board, an alternate member of the board
                must be named; an alternate director of an independent
                proprietary director must be also independent;

        (iii)   At least 25% of the members of the board must be independents
                according to the article 14 Bis 3 of the Ley del Mercado de
                Valores ("Securities Market Law").

        Apart from satisfying all of the requirements mentioned above, failure
to meet these standards for any reason will not constitute grounds for judicial
action challenging any act, contract, or agreement undertaken by the board, an
intermediate committee or other delegated authority. Furthermore, such standards
will not be mandatory for the validity or existence of such acts.

        The board of directors must meet at least every three months at our
address or any other place in Mexico and on the dates that the board determines.
Meetings previously scheduled in accordance with a schedule pre-approved by the
board do not need to be called. Meetings must be called by at least 25% of the
members of the board of directors, the Chairman of the board of directors, the
Vice-Chairman of the board of directors or in the case of a commissary, the
Secretary or the alternate Secretary of the board. Members of the board must be
notified via e-mail or in writing at least five calendar days in advance of a
meeting. The Commissaries must be called to every meeting of the board, where
they have the right to speak, but not the right to vote.

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STATUTORY AUDITOR

        As determined by Mexican law, the statutory auditor's role is to verify
information on the company, to audit its operations and to report on the company
to stockholders at the annual stockholders' meeting. Any stockholder with at
least 10% of our capital stock--even a stockholder without the right to
vote--has the right to designate a statutory auditor. In the case of a statutory
auditor appointed by a minority of stockholders, the majority may revoke that
appointment provided that it revokes the appointment of all other statutory
auditors as well. A statutory auditor does not need to be a stockholder and
maintains his or her position for one year, but may continue to fulfill his or
her duties until the replacement takes over the position. A statutory auditor
may be reelected. A substitute statutory auditor may assume the duties of any
statutory auditor who, for any reason, cannot perform his or her duties.

DIVIDEND AND DISTRIBUTIONS

        At the annual ordinary general stockholders' meeting, the board of
directors submits our financial statements for the previous fiscal year,
together with a report thereon by the board, to the holders of Series B Shares
for their consideration. The holders of Series B Shares, once they have approved
the financial statements, determine the allocation of our net profits, if any,
for the preceding year. They are required by law to allocate 5% of such net
profits to a legal reserve, which is not thereafter available for distribution
until the amount of the legal reserve equals 20% of our historical capital stock
(before giving effect to the restatement thereof in constant pesos). As of
December 31, 2004, our legal reserve fund was equal to at least 20% of our
paid-in capital stock. Amounts in excess of those allocated to the legal reserve
fund may be allocated to other reserve funds as the stockholders determine,
including a reserve for the repurchase of our Shares. The remaining balance of
net profits, if any, is available for distribution as dividends. No dividends
may be paid, however, unless losses for prior fiscal years have been paid or
absorbed.

        Holders of Units and B Units and, accordingly, holders of ADSs will have
equal rights, on a per Share basis, to dividends and other distributions,
including any distributions we make upon liquidation. Partially paid Units or
Shares participate in any distribution to the extent that such Units or Shares
have been paid at the time of the distribution or, if not paid, only with
respect to the proportion paid.

CHANGES IN CAPITAL STOCK

        An increase of capital stock may generally be effected through the
issuance of new Units or Shares for payment in cash or in kind, by
capitalization of indebtedness or by capitalization of certain items of
stockholders' equity. An increase of capital stock generally may not be realized
until all previously issued and subscribed Units or Shares of capital stock have
been fully paid. Generally, a reduction of capital stock may be effected to
absorb losses, to redeem Units or Shares, or to release stockholders from
payments not made. A reduction of capital stock to redeem Units or Shares is
effected by reimbursing holders of Units or Shares pro rata or by lot.
Stockholders may also approve the redemption of fully paid Units or Shares with
retained earnings. Such a redemption would be effected by a repurchase of Units
or Shares on the Mexican Stock Exchange (in the case of Units or Shares listed
thereon) and would be subject to the limitation that the Series L Shares may not
at any time represent more than 25% of our capital stock.

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<PAGE>

        Except under limited circumstances, the bylaws require that any capital
increase effected pursuant to a capital contribution be represented by new
Series B Shares and Series L Shares in proportion to the number of Shares of
each such Series outstanding.

        The fixed portion of our capital stock may only be increased or
decreased by resolution of a general extraordinary meeting and an amendment to
the bylaws, whereas the variable portion of our capital stock may be increased
or decreased by resolution of a general ordinary meeting. See "Other
Provisions--Fixed and Variable Capital."

        No resolution by the stockholders is required for decreases in capital
stock resulting from exercise of our right to withdraw variable shares or from
our repurchase of our own Shares or for increases in capital stock resulting
from our sale of Shares we previously purchased. See "Other Provisions--Purchase
by the Company of its Shares" and "Other Provisions--Appraisal Rights."

        In order for any capital increase for payment in cash to take place,
holders of at least 85% of the Trust Shares must instruct the trustee of the
Control Trust to vote in favor of such capital increase.

PREEMPTIVE RIGHTS

        Except in certain limited circumstances, in the event of a capital
increase through the issuance of new Shares for payment in cash or in kind, a
holder of existing Shares of a given Series at the time of the capital increase
has a preferential right to subscribe for a sufficient number of new Shares of
the same Series to maintain the holder's existing proportionate holdings of
Shares of that Series or, in the event of a capital increase through the
issuance of limited-voting or non-voting stock only, to subscribe for a
sufficient number of the shares to be issued to maintain the holder's existing
proportionate holdings of our capital stock. Preemptive rights must be exercised
within 15 days following the publication of notice of the capital increase in
the Diario Oficial de la Federacion (Official Gazette) or following the date of
the stockholders' meeting at which the capital increase was approved if all
stockholders were represented at such meeting; otherwise such rights will lapse.
Under Mexican law, preemptive rights cannot be waived in advance by a
stockholder, except under limited circumstances and cannot be represented by an
instrument that is negotiable separately from the corresponding share. The
Robinson Bours Stockholders, including the Selling Stockholders, have waived all
preemptive rights with respect to the Series B Shares and Series L Shares
comprised in the Units underlying the ADSs being offered in the Global Offering.
Holders of ADRs that are U.S. citizens or are located in the United States may
be restricted in their ability to participate in the exercise of preemptive
rights. See "Description of American Depositary Receipts--Dividends, Other
Distributions and Rights."

FOREIGN INVESTMENT LEGISLATION

        Ownership by foreigners of shares of Mexican companies is regulated by
the Ley de Inversion Extranjera ("Foreign Investment Law") and by the Reglamento
de la Ley para Promover la Inversion Mexicana y Regular la Inversion Extranjera
("Foreign Investment Regulations"). The Ministry of Commerce and Industrial
Development and the Foreign Investment Commission are responsible for the
administration of the Foreign Investment Law.

        The Foreign Investment Law reserves certain economic activities
exclusively for the Mexican state and certain other activities exclusively for
Mexican individuals or Mexican corporations and limits the participation of
foreign investors to certain percentages in regard to enterprises engaged in
activities specified therein. Foreign investors may own up to 100% of the
capital stock of Mexican companies or entities, except for companies (i) engaged
in reserved activities as referred to above or (ii) with assets exceeding an
amount to be established annually by the Foreign Investment Commission (which
has been set at Ps.394 million), in which case an approval from the Foreign
Investment Commission will be necessary in order for foreign investment to
exceed 49% of the capital stock. Mexican and non-Mexican nationals will be
entitled to hold and to exercise the rights of a holder of the Units, the Series
B Shares and the Series L Shares. The Robinson Bours Stockholders have advised
us that they intend to maintain a control position directly in the form of B
Units. Pursuant to our bylaws, foreigners may only own Series B Shares up to 49%
of such series.

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OTHER PROVISIONS

        Fixed and Variable Capital. As a sociedad anonima de capital variable,
we are permitted to issue shares constituting fixed capital and shares
constituting variable capital. The issuance of variable capital shares, unlike
the issuance of fixed capital shares, does not require an amendment of the
bylaws, although it does require approval at a general ordinary stockholders'
meeting.

        No shares representing variable capital are currently outstanding or
will be issued in connection with the Global Offering. The outstanding variable
capital shares, if any, may be fully withdrawn by the holders thereof. Except as
otherwise provided under "--Appraisal Rights" below, the Minimum Capital cannot
be withdrawn. A holder of variable capital stock that wishes to effect a total
or partial withdrawal of such stock is required to notify us in an authenticated
written notice to that effect. If notice of withdrawal is received prior to the
last quarter of the fiscal year, the withdrawal becomes effective at the end of
the fiscal year in which the notice was given. Otherwise, the withdrawal becomes
effective at the end of the following fiscal year.

        Redemption of our variable capital stock is made at the lower of (i) 95%
of the average share price quoted on the Mexican Stock Exchange during the 30
business days prior to the date on which the withdrawal is to become effective
or if the number of the days that the shares were negotiated is less than 30
days we will consider only the days in when the shares were effectively
negotiated (ii) the book value per variable capital share as calculated from our
consolidated balance sheets (as approved at a general ordinary stockholders'
meeting) for the previous fiscal year in which the withdrawal became effective.
Any such amount to be paid by us would become due on the day following the
general ordinary stockholders' meeting referred to in clause (ii) above.

        Forfeiture of Shares. As required by Mexican law, our bylaws provide
that our current and future foreign stockholders are formally bound to the
Mexican Secretaria de Relaciones Exteriores ("Ministry of Foreign Relations") to
consider themselves as Mexican nationals with respect to our Units and Shares
that they may acquire or of which they may be owners, and with respect to the
property, rights, concessions, participations or interests that we may own or
rights and obligations that are based on contracts to which we are party with
the Mexican authorities, and not to invoke the protection of their government
under penalty, should they do so, of forfeiting to the Mexican State the
corporate participation that they may have acquired. In the opinion of Franck,
Galicia, Duclaud & Robles, S.C., our special Mexican counsel, under this
provision a non-Mexican stockholder (including a non-Mexican holder of ADSs) is
deemed to have agreed not to invoke the protection of his own government by
requesting such government to interpose a diplomatic claim against the Mexican
government with respect to the stockholder's rights as a stockholder, but is not
deemed to have waived any other rights it may have with respect to its
investment in us, including any rights under U.S. securities laws. If the
stockholder should invoke such governmental protection in violation of this
agreement, its Units could be forfeited to the Mexican State. Mexican law
requires that such a provision be included in the bylaws of all Mexican
corporations unless such bylaws prohibit ownership of capital stock by foreign
investors.

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        Exclusive Jurisdiction. Our bylaws provide that legal actions relating
to any conflict between our stockholders and us, or among the stockholders in
connection with matters related to us, may be brought only in courts in Mexico
City. Therefore, our stockholders are restricted to the courts of Mexico City.

        Duration. The duration of our existence under our bylaws is indefinite.

        Repurchase of our own Shares. We may repurchase our Units on the
Mexican Stock Exchange at any time at the then-prevailing market price. Any
repurchases will be charged to the Stockholders Equity as long as these shares
belong to the same company, or to the Capital Stock in the event that we convert
these shares to treasury stock, and in this last case no resolution of the
stockholders' meeting is required. At each annual ordinary stockholders'
meeting, the maximum amount of resources that may be used to repurchase shares
will be expressly defined. The board of directors will name the persons
responsible for the operation of the repurchase process. The shares that belong
to the Treasury Stock or us can be resold among the public stockholders; in the
latter case, no resolution of a stockholders meeting is necessary for an
increase in capital. The economic and voting rights corresponding to such
repurchased Units or Shares may not be exercised during the period in which such
Units or Shares are owned by us, and such Units or Shares are not deemed to be
outstanding for purposes of calculating any quorum or vote at any stockholders'
meeting during such period. Any repurchase of our own Units or Shares is subject
to the limitation that the Series L Shares may not at any time represent more
than 25% of our capital stock.

        Repurchase in the Event of Delisting. Our shares are registered with
the National Registry for Securities, as required under the Securities Market
Law and regulations issued by the CNBV. If we wish to cancel our registration,
or if it is cancelled by the CNBV, the stockholders having the majority of the
ordinary shares or that may, on any basis, impose decisions at stockholders'
meetings, or appoint the majority of the board of directors of the Company at
that time, will be required to make a public offer to purchase all outstanding
shares prior to such cancellation. Under our bylaws, if after the public offer
is concluded there are still outstanding shares held by the general public, the
stockholders that control the Company will be required to create a trust for a
minimum period of six months, into which such controlling stockholders will be
required to contribute funds in an amount sufficient to purchase, at the same
price as the offer price, the number of outstanding shares held by the general
public.

        Non-Subscribed Shares. With prior authorization of the CNBV, we may
issue non-subscribed shares provided that such shares will be held by a
depositary institution and that there is compliance with the conditions of
Article 81 of the Ley del Mercado de Valores ("Mexican Securities Law"). In any
extraordinary stockholders' meeting at which this issuance of non-subscribed
Shares is approved, the preference rights established by Article 132 of the
Mexican Companies Law must be respected. With a quorum at the meeting, the
approval of the issuance will take effect, even with respect to stockholders
that were not present at the meeting, such that we will be free to issue these
shares with no prior publication. When a minority of stockholders representing
at least 25% of the voting capital stock, vote against the issuance of these
shares, such issuance can not be made. Any stockholder that votes against this
issuance at the stockholders meeting will have the right to request that we sell
its shares before issuing the new non-subscribed shares. In such event, we will
have the obligation to sell first the shares belonging to such stockholders, at
the same price that the non-subscribed shares are to be offered to the public.

        Stockholder Conflicts of Interest. Under Mexican law, any stockholder
that has a conflict of interest with respect to any transaction must abstain
from voting thereon at the relevant stockholders' meeting. A stockholder that
votes on a business transaction in which its interest conflicts with that of
ours may be liable for damages if the transaction would not have been approved
without such stockholder's vote.

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        Board Member Conflicts of Interest. Under Mexican law, any member of
the board of directors who has a conflict of interest with us in any transaction
must disclose such fact to the other members of the board of directors and
abstain from voting. Any member of the board of directors who violates such
provision may be liable for damages caused to us. Additionally, members of the
board of directors and statutory auditors may not represent other stockholders
at any stockholders' meeting.

        Appraisal Rights. Whenever the stockholders approve a change of
corporate purpose, a change in our nationality or transformation from one type
of corporate form to another, any stockholder entitled to vote on such change or
transformation who has voted against it has the right to withdraw from us and
receive the amount calculated as specified under Mexican law attributable to its
Shares, provided such stockholder exercises its right to withdraw within 15 days
following the adjournment of the meeting at which the change or transformation
was approved. Under Mexican law, the amount that a withdrawing stockholder is
entitled to receive is equal to its proportionate interest in our capital stock
according to the most recent balance sheet that has been approved by an ordinary
general meeting of stockholders. Because the Series L Shares may not vote with
respect to a change of corporate purpose or change of nationality, appraisal
rights with respect to such changes are not available to holders of Series L
Shares.

        Actions Against Directors. Under Mexican law, an action for civil
liabilities against members of the board of directors may be initiated by
resolution of an ordinary stockholders' meeting. In the event the ordinary
stockholders' meeting decides to bring such an action, the persons against whom
such action is brought will immediately cease to be members of the board of
directors. Additionally, stockholders representing not less than 33.0% of our
outstanding Shares may directly take such action against members of the board of
directors, provided that (i) such stockholders have not voted against taking
such action at the relevant stockholders' meeting and (ii) the claim in question
covers damage alleged to have been caused to us and not merely to the individual
plaintiffs. Any recovery of damages with respect to such action will be for our
benefit and not for the stockholders bringing the action.

AUDIT COMMITTEE

        Under our bylaws the board of directors is required to create an audit
committee under the terms and conditions outlined below:

        1)      The audit committee will consist of members of the board. The
                President of the audit committee and a majority of the audit
                committee members must be independent, as independence is
                defined under the Mexican Securities Market Law. In addition,
                the audit committee must have auditors who attend every meeting
                and have the right to participate but not to vote.

        2)      The audit committee will have, among others, the following
                functions:

            a)    To prepare a report about its activities and present it to the
                  board of directors.

            b)    Provide its opinion regarding any transaction with related
                  parties, which is outside the scope of ordinary business.

            c)    Recommend independent consultants or auditors to provide their
                  opinion regarding any transactions with related parties that
                  are outside the scope of ordinary business, which the Company
                  or any of its subsidiaries seek to engage in.

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        Transactions that depart from the ordinary course of business and which
would be entered into by and between subsidiaries of the Company and its
stockholders, with persons who form part of the management of the Company's
subsidiaries or with those with whom such persons maintain monetary ties or, if
applicable, have a family relationship of consanguinity or affinity up to the
second degree, a spouse or concubine; which represent the purchase or sale of
10% or more of assets; the granting of guaranties in an amount in excess of 30%
of assets, as well as transactions other than the foregoing which represent more
than 1% of the Company's assets, shall be submitted for the opinion of the
Company's audit committee and for approval by the Company's board of directors.

EXCHANGE CONTROLS

        Ownership by foreigners of Mexican companies is regulated by Foreign
Investment Law and by the Foreign Investment Regulations. The Ministry of
Commerce and Industrial Development and the Foreign Investment Commission are
responsible for the administration of the Foreign Investment Law.

        The Foreign Investment Law reserves certain economic activities
exclusively for the Mexican state and certain other activities exclusively for
Mexican individuals or Mexican corporations and limits the participation of
foreign investors to certain percentages in regard to enterprises engaged in
activities specified therein. Foreign investors may own 100% of the capital
stock of Mexican companies or entities, except for companies (i) engaged in
reserved activities as referred to above or (ii) with assets exceeding an amount
to be established annually by the Foreign Investment Commission (which has been
set at Ps.411.3 million), in which case an approval from the Foreign Investment
Commission shall be necessary in order for foreign investment to exceed 49% of
the capital stock. Mexican and non-Mexican nationals will be entitled to hold
and to exercise the rights of a holder of the Units, the Series B Shares and the
Series L Shares. The Robinson Bours Stockholders have advised us that they
intend to maintain a control position directly in the form of B Units. Pursuant
to our bylaws, foreigners may only own Series B Shares up to 49% of such Series.

TAXATION

        The following is a general summary of the principal U.S. federal tax
consequences and the principal Mexican federal tax consequences of the
acquisition, ownership and disposition of Units or ADSs. This summary does not
purport to address all material tax consequences that may be relevant to holders
of Units or ADSs, and does not take into account the specific circumstances of
any particular investors, some of which (such as tax-exempt entities, banks,
insurance companies, broker-dealers, traders in securities that elect to use a
mark-to-market method of accounting for their securities holdings, regulated
investment companies, real estate investment trusts, partnerships and other
pass-through entities, investors liable for the U.S. alternative minimum tax,
investors that own or are treated as owning 10% or more of our voting stock,
investors that hold units or ADSs as part of a straddle, hedge, conversion
transaction or other integrated transaction and U.S. Holders (as defined below)
whose functional currency is not the U.S. dollar) may be subject to special tax
rules. In addition, this summary is based in part upon the representations of
the Depositary and the assumption that each obligation in the deposit agreement,
and in any related agreement, will be performed in accordance with its terms.

        For purposes of this discussion, a "U.S. Holder" is any beneficial
owner of Units or ADSs that, for U.S. federal income tax purposes, is:

        1. an individual who is a citizen or resident of the United States,

        2. a corporation (or other entity taxable as a corporation for U.S.
federal income tax purposes) organized in or under the laws of the United
States, any state thereof, or the District of Columbia,

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        3. an estate the income of which is subject to U.S. federal income tax
without regard to its source, or

        4. a trust that is subject to the primary supervision of a U.S. court
and the control of one or more U.S. persons, or that has a valid election in
effect under applicable Treasury regulations to be treated as a U.S. person.This
summary is based on the federal income tax laws and regulations of the United
States and Mexico, judicial decisions, published rulings and administrative
pronouncements all as in effect on the date hereof, and all of which are subject
to change, and such changes may have retroactive effect. Prospective purchasers
of Units or ADSs should consult their own tax advisors as to the U.S., Mexican
or other tax consequences of the purchase, ownership and disposition of Units or
ADSs, including, in particular, the effect of any non-U.S. non-Mexican, state or
local tax laws.

        A Convention for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income, and a Protocol thereto, between
the United States and Mexico (the "Tax Treaty") took effect on January 1, 1994.
The Tax Treaty was amended by a second Protocol signed November 26, 2002, the
provisions of which took effect in part on September 1, 2003, and in part on
January 1, 2004. The United States and Mexico have also entered into an
agreement concerning the exchange of information with respect to tax matters.

        In general, for U.S. federal income tax purposes, holders of ADRs
evidencing ADSs will be treated as the beneficial owners of the Units
represented by those ADSs.

U.S. FEDERAL INCOME TAXATION

U.S. HOLDERS

        The following discussion is a summary of the principal U.S. federal
income tax consequences to holders of our Units and of ADSs that are U.S.
Holders and that hold those Units or ADSs as capital assets (generally, for
investment purposes).

TAXATION OF DIVIDENDS

        Cash dividends paid with respect to the Shares constituting the Units
or Units represented by ADSs to the extent paid out of our earnings and profits
(as determined under U.S. federal income tax principles) will be included in the
gross income of a U.S. Holder as ordinary income on the day on which the
dividends are received by the U.S. Holder, in the case of Units, or the
Depositary, in the case of Units represented by ADSs, and will not be eligible
for the dividends-received deduction allowed to corporations under the Internal
Revenue Code of 1986, as amended (the "Code").

        Dividends paid in pesos will be included in the gross income of a U.S.
Holder in a U.S. dollar amount calculated by reference to the exchange rate in
effect on the day they are received by the U.S. Holder, in the case of Units, or
the Depositary, in the case of Units represented by ADSs (regardless of whether
such pesos are in fact converted into U.S. dollars on such date). If such
dividends are converted into U.S. dollars on the date of receipt, a U.S. holder
generally should not be required to recognize foreign currency gain or loss in
respect of the dividends. U.S. Holders should consult their own tax advisors
regarding the treatment of foreign currency gain or loss, if any, on any pesos
received which are converted into U.S. dollars on a date subsequent to receipt.

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        Subject to certain exceptions for short-term and hedged positions, and
provided that we are not a passive foreign investment company (as discussed
below), dividends received by certain U.S. Holders (including individuals) prior
to January 1, 2009 with respect to the Units or ADSs will be subject to U.S.
federal income taxation at a maximum rate of 15%. However, the U.S. Treasury
Department has announced its intention to promulgate rules pursuant to which
shareholders (and intermediaries) will be permitted to rely on certifications
from issuers to establish that dividends qualify for the reduced rate of U.S.
federal income taxation. Because such procedures have not yet been issued, we
are not certain that we will be able to comply with them. U.S. Holders of Units
or ADSs should consult their own tax advisors regarding the availability of the
reduced rate in the light of their own particular circumstances.

        Distributions to U.S. Holders of additional Unitsrelating to Units with
respect to their Units or ADSs that are made as part of a pro rata distribution
to all of our stockholders generally will not be subject to U.S. federal income
tax. If holders of the ADSs are restricted in their ability to participate in
the exercise of preemptive rights, the preemptive rights may give rise to a
deemed distribution to holders of the Units under Section 305 of the Code. Any
deemed distributions will be taxable as a dividend in accordance with the
general rules of the income tax treatment of dividends discussed above.

TAXATION OF CAPITAL GAINS

        Gain or loss recognized by a U.S. Holder on the sale or other taxable
disposition of Units or ADSs generally will be subject to U.S. federal income
taxation as capital gain or loss in an amount equal to the difference between
such U.S. Holder's adjusted tax basis in the Units or ADSs and the amount
realized on the disposition. A U.S. Holder generally will have an adjusted tax
basis in a Unit or an ADS equal to its U.S. dollar cost. Gain or loss recognized
by a U.S. Holder on the sale or other disposition of Units or ADSs will
generally be long-term gain or loss if, at the time of disposition, the U.S.
Holder has held the Units or ADSs for more than one year.

        Certain U.S. Holders, including individuals, are eligible for
preferential rates of U.S. federal income tax in respect of long-term capital
gains. The deduction of a capital loss is subject to limitations under the Code.

        Gain realized by a U.S. Holder on a sale or other disposition of Units
or ADSs generally will be treated as U.S. source income for U.S. foreign tax
credit purposes. Consequently, if any Mexican withholding tax is imposed on the
sale or disposition of the Units, a U.S. holder that does not receive
significant foreign source income from other sources may not be able to derive
effective U.S. foreign tax credit benefits in respect of these Mexican taxes.
U.S. holders should consult their own tax advisors regarding the application of
the foreign tax credit rules to their investment in, and disposition of, the
Units or ADSs.

        Deposits and withdrawals of Units by U.S. Holders in exchange for ADSs
will not result in the realization of gain or loss for U.S. federal income tax
purposes.

PASSIVE FOREIGN INVESTMENT COMPANIES

        A non-U.S. corporation generally will be classified as a passive
foreign investment company (a "PFIC") for U.S. federal income tax purposes in
any taxable year in which, after applying look-through rules, either (1) at
least 75% of its gross income is passive income, or (2) on average at least 50%
of the gross value of its assets is attributable to assets that produce passive
income or are held for the production of passive income. Passive income for this
purpose generally includes dividends, interest, royalties, rents and gains from
commodities and securities transactions. The PFIC determination is made annually
and generally is based on the value of a non-U.S. corporation's assets
(including goodwill) and composition of its income.

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        We do not believe that we are a PFIC for U.S. federal income tax
purposes, and we intend to continue our operations in such a manner that we will
not become a PFIC in the future although no assurances can be made regarding
determination of our PFIC status in the current or any future taxable year. If
we become a PFIC, U.S. Holders could be subject to additional U.S. federal
income taxes on gain recognized with respect to the Units or ADSs and on certain
distributions. In addition, an interest charge may apply to the portion of the
U.S. federal income tax liability on such gains or distributions treated under
the PFIC rules as having been deferred by the U.S. Holder. Moreover, dividends
that a U.S. Holder receives from us will not be eligible for the reduced U.S.
federal income tax rates described above if we are a PFIC either in the taxable
year of the distribution or the preceding taxable year (and instead will be
taxable at rates applicable to ordinary income).

        Prospective investors should consult their own tax advisors regarding
the potential application of the PFIC rules to Units or ADSs.

NON-U.S. HOLDERS

        The following discussion is a summary of the principal U.S. federal
income tax consequences to beneficial holders of Units or ADSs that are neither
U.S. Holders nor partnerships for U.S. federal income tax purposes ("Non-U.S.
Holders").

        Subject to the discussion below under "Backup Withholding and
Information Reporting", a Non-U.S. Holder generally will not be subject to any
U.S. federal income or withholding tax on distributions received in respect of
Units or ADSs unless the distributions are effectively connected with the
conduct by the Non-U.S. Holder of a trade or business within the United States
(and, if an applicable tax treaty requires, is attributable to a U.S. permanent
establishment or fixed base of such Non-U.S. Holder).

        Subject to the discussion below under "U.S. Backup Withholding and
Information Reporting", a Non-U.S. Holder of Units or ADSs will not be subject
to U.S. federal income or withholding tax on gain realized on the sale of Units
or ADSs, unless (i) such gain is effectively connected with the conduct by such
Non-U.S. Holder of a trade or business in the United States or (ii) in the case
of gain realized by an individual Non-U.S. Holder, such holder is present in the
United States for 183 days or more in the taxable year of the sale and certain
other conditions are met.

U.S. BACKUP WITHHOLDING AND INFORMATION REPORTING

        A U.S. Holder of Units or ADSs may, under certain circumstances, be
subject to "backup withholding" with respect to certain payments to such U.S.
Holder, such as dividends paid by us or the proceeds of a sale of Units or ADSs,
unless such holder (i) is a corporation or comes within certain other exempt
categories, and demonstrates this fact when so required or (ii) provides a
correct taxpayer identification number, certifies that it is a U.S. person and
that it is not subject to backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. Any amount withheld
under these rules will be creditable against the U.S. Holder's U.S. federal
income tax liability. While Non-U.S. Holders generally are exempt from backup
withholding, a Non-U.S. Holder may, in certain circumstances, be required to
comply with certain information and identification procedures in order to prove
this exemption.

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MEXICAN TAXATION

        The Mexican tax rules governing the taxation of gains of holders who
are not Mexican Residents (as defined below) on dispositions of their shares or
ADSs were amended during 2002. Holders who are not Mexican Residents who
disposed of their Units or ADSs during or after 2003 should consult their own
Mexican tax advisors on the Mexican tax treatment of such dispositions.

        A Mexican citizen is presumed to be a resident of Mexico for tax
purposes unless such person can demonstrate otherwise. If a person is deemed to
have a permanent establishment or fixed base in Mexico for tax purposes, such
person shall be required to pay taxes in Mexico on income attributable to such
permanent establishment or fixed base, in accordance with applicable tax laws.

TAXATION OF DIVIDENDS

        Dividends, either in cash or in any other form, paid with respect to
the Shares constituting the Units or the ADSs will not be subject to Mexican
withholding tax.

TAXATION OF CAPITAL GAINS

        Gain on the sale or other disposition of ADSs by holders who are not
Mexican Residents will not be subject to Mexican income tax. Deposits of Units
in exchange for ADSs and withdrawals of Units in exchange for ADSs will not give
rise to Mexican income tax.

        Gain on the sale of Units by a holder who is not a Mexican Resident (as
defined below) will not be subject to Mexican tax if the transaction is carried
out through the Mexican Stock Exchange or other securities markets approved by
the Mexican Ministry of Finance, and provided certain requirements set forth by
the Mexican Income Tax Law are complied with. Sales or other dispositions of
Units made in other circumstances generally would be subject to Mexican tax,
except to the extent that a holder is eligible for benefits under an income tax
treaty ("Tax Treaty") to which Mexico is a party. Under the Tax Treaty, gain on
the sale or other disposition of Units by a U.S. resident (if eligible for
benefits under the Tax Treaty) who is a holder of less than 25% of our capital
stock during the 12-month period preceding such sale or disposition will not be
subject to Mexican tax, unless either (i) 50% or more of the fair market value
of our assets consist of "immovable property" (as defined in the Tax Treaty)
situated in Mexico, or (ii) such gains are attributable to a permanent
establishment or fixed base of such U.S. resident in Mexico.

        For a holder that is not a Mexican Resident and that does not meet the
requirements referred to above, gross income realized on the sale of Units will
be subject to a 5% Mexican withholding tax if the transaction is carried out
through the Mexican Stock Exchange. Alternatively, a holder that is not a
Mexican Resident can choose to be subject to a 20% withholding rate on the net
gain obtained, as calculated pursuant to Mexican Income Tax Law provisions. In
both cases the tax will be withhold by a withholding agent.

        For purposes of Mexican taxation (Ley del Impuesto sobre la renta), an
individual is a resident of Mexico (a "Mexican Resident") if he or she has
established his or her home in Mexico, unless he or she has also a home in other
country, and less that 50% of their total income comes from his or her
operations in Mexico and such individual can demonstrate that he or she has
become a resident of that country for tax purposes.

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        A legal entity is a Mexican Resident if it has been incorporated under
Mexican law. A company is also considered to be a Mexican Resident if the main
management of the company is located in Mexico or if the "effective direction"
of the company is located in Mexico. The "effective direction" of the company is
considered to be located in Mexico if among others factors: the shareholders
meetings of the company or its board of directors meeting are held in Mexico;
the main decisions regarding the control and management of the company are made
by Mexican Residents or Persons with an office located in Mexico; there is an
office in Mexico where the main control and management decisions are made; all
its accounting information resides in Mexico.

OTHER MEXICAN TAXES

        There are no Mexican inheritance, succession or similar taxes applicable
to the ownership, transfer or disposition of ADSs or Units by holders that are
not Mexican Residents; provided, however, that gratuitous transfers of Units may
in certain circumstances cause a Mexican federal tax to be imposed on the
recipient. There are no Mexican stamp, issue, registration or similar taxes or
duties payable by holders of ADSs or Units. However, brokerage fees on
securities transactions carried out through the Mexican Stock Exchange are
subject to a 15% valued added tax.

DOCUMENTS ON DISPLAY

        The documents concerning us which are referred to in this document are
available at the our company headquarters, located at Ave. Tecnologico No.401,
Cd. Industrial, Celaya, Guanajuato, 38010, Mexico, for any inspection required.
Part of this information is available on our web page, at www.bachoco.com.mx.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        In the normal course of our business, we hold or issue various financial
instruments that expose us to financial risks involving fluctuations in currency
exchange rates and interest rates. Also, we are exposed to commodity price risk
in connection with fluctuations in the prices for our feed ingredients.

CURRENCY FLUCTUATION

        Our exposure to market risk associated with changes in foreign currency
exchange rates relates primarily our debt obligations and other expenses which
are denominated in U.S. dollars. Since we have significant liabilities
denominated in U.S. dollars, we are exposed to foreign exchange losses when the
peso declines in value against the U.S. dollar. The peso has been subject to
significant volatility in the past and may be subject to significant
fluctuations in the future.

        All of our sales are priced in Mexican pesos, and we have significant
expenses in U.S. dollars. A significant portion of our feed purchases is priced
in U.S. dollars, and other purchases may be influenced by U.S. dollar prices. A
devaluation of the peso will accordingly affect our earnings. In addition, the
Mexican peso exchange rate can directly and indirectly impact our results of
operations and financial position in several manners, including potential
economic recession in Mexico resulting from a devalued peso.

        Part of our debt is denominated in U.S. dollars, However, we experienced
foreign exchange gains of Ps.45.4 million in 2002, Ps.72.6 million in 2003 and
Ps.45.1 million in 2004, due to the net position of our liabilities and assets
that are denominated in U.S. dollars, since we had more assets, (cash and cash
equivalents), than liabilities denominated in U.S. dollars.

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        No assurance can be given as to the future valuation of the Mexican peso
and how further movements in the peso could affect our future earnings.

        We manage our exchange rate exposure primarily through management of our
financial structure, specifically by maintaining most of our debt through
long-term debt instruments. We engage in only limited hedging of our exposure to
foreign exchange risk, since hedging instruments have historically not been
economically feasible. We plan over a six-month period into the future and,
depending on the expected uncertainty for that period, decide if it is
economically advisable to purchase or sell any hedging instrument.

        During 2003 and 2004, we have observed different strategies with respect
to derivatives which involve call and put options in U.S. dollars.

        At December 31, 2003, we had entered into exchange-rate options, which
expired during 2004. At December 31, 2003, we had a call option of $ 33.5
(million of usd), for which we paid a premium of Ps 17.8 million, as well as put
options of $ 84.6 (million of usd), for which we received a premium of Ps 22.1
million. Considering the fair value of these transactions, the closing of the
call-option position was Ps 18.0 million and the put- option position was Ps
15.8 million, thus giving rise to a gain of Ps 6.6 million, which was recorded
in the caption foreign exchange gain, net.

        At December 31, 2004, we maintain positions in several financial
instrument derivatives, for details please see note 7 to our Consolidated
Financial Statement.

        Based on our position in December 2004, please see note 15 in our
Consolidated Financial Statements, we estimate that an hypothetical 10%
devaluation of the Mexican peso against the U.S. dollar, would result in losses
of Ps.8.8 million and gains of Ps.102.6 million in our Foreign Exchange Results.

INTEREST RATES

        Our earnings may also be affected by changes in interest rates due to
the impact those changes have on our variable-rate debt instruments. As of
December 31, 2004, we had borrowings of approximately Ps.172.2 million pursuant
to variable rate debt instruments, representing approximately 1.3% of our total
assets.

        Based on our position on December 31, 2004, we estimate that a
hypothetical interest rate variation of 250 basis points on our U.S. dollar
denominated debt would result in increased interest expenses of approximately
Ps.0.01 million per annum, and a hypothetical interest rate variation of 0.5% on
our Mexican peso denominated debt would result in increased interest expenses of
approximately Ps. 0.9 million per annum. Any such increase would likely be
offset by an increase in interest income due to our significant cash and cash
equivalent position. Based on our Cash and Cash equivalents on December 31,
2004, we estimate that a hypothetical interest rate variation of 0.5%, will
affect our interest income by Ps. 11.7 millions.

FEED INGREDIENTS

        The largest single component of our cost of sales is the cost of
ingredients used to prepare feed, including principally, sorghum, soy meal,
corn, fish meal, meat meal and, for certain chicken products, marigold extract.
The price of these ingredients is subject to significant volatility resulting,
among other factors, from weather, the size of harvests, transportation and
storage costs, governmental agricultural policies and currency exchange rates.
In order to reduce the potential adverse effect of grain price fluctuations, we
vary the composition of our feed to take advantage of current market prices for
the various types of ingredients used.

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        Previously, we took advantage of the lower cost of feed ingredients
available from Mexican sources and increased the portion of our total needs that
we source locally, from approximately 40% in 1995 to approximately 60% in 1999.
We believe that local feed, particularly sorghum, is of superior quality
compared to imported feed ingredients. In addition, the use of local feed allows
us to save on transportation costs and import duties. Our feed costs were
favorably affected by changes in the Mexican government's agricultural policy,
beginning in 1991, that eliminated price supports for domestic farmers and
reduced procedural restrictions on importing grains, and by the reduction in
tariffs with the implementation of NAFTA beginning in 1994.

        However, this trend reversed in 2000, when only 45.0% of feed
ingredients were purchased from local sources. The change occurred mainly
because grain for the acquired Grupo Campi complexes is supplied from
international markets due to a lack of domestic supply in southern Mexico. In
general, costs of domestic feed ingredients tend to follow the international
markets, although cost adjustments do not occur simultaneously. In 2001, we
purchased approximately 40.6% of grain from local sources, while in 2002 we
purchased approximately 30.1% of grain from local sources. In 2003 the
percentage of grain purchased from domestic markets was 38.3%, and in 2004 it
was approximately 35.0%.

        Based on results for 2004, we estimate that an hypothetical variation of
10% in the cost of our feed ingredients would have an impact of Ps.646.9
million, or 6.0%, on total cost of sales.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

        Not applicable.

PART II.

ITEM 13. DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES

        None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
         PROCEEDS

        None.

ITEM 15. CONTROLS AND PROCEDURES

        We carried out an evaluation under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of December 31, 2004. There are inherent
limitations to the effectiveness of any system of disclosure controls and
procedures, including the possibility of human error and the circumvention or
overriding of the controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable assurance of
achieving their control objectives. Based upon and as of the date of our
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that the disclosure controls and procedures are effective to provide reasonable
assurance that information required to be disclosed in the reports we file and
submit under the Securities Exchange Act is recorded, processed, summarized and
reported as and when required.

                                       72
<PAGE>

        There has been no change in our internal control over financial
reporting during 2004 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

        Currently, no member of our audit committee possesses all the
characteristics included in the definition of an "audit committee financial
expert" within the meaning of this Item 16A. We consider that the combined
financial expertise of the members of our audit committee meet much of this
requirement. Our audit commits has the authority and appropriated funding to
obtain outside advice, as it deems necessary, to carry out its duties. Also,
pursuant to local law, we have a statutory auditor who is responsible for
reviewing financial matters and, beginning in 2005, he will be responsible for
reviewing and analyzing all financial data provided to our audit committee.

ITEM 16B. CODE OF ETHICS

        We have adopted a code of ethics, as defined in Item 16B of Form 20-F
under the Securities Exchange Act of 1934, as amended. Our code of ethics
applies to our Chief Executive Officer, Chief Financial Officer, controller and
persons performing similar functions, as well as to other officers and
employees. Our code of ethics is available free of charge upon request through
our website www.bachoco.com.mx. If we amend the provisions of our code of ethics
that apply to our Chief Executive Officer, Chief Financial Officer, controller
and persons performing similar functions, or if we grant any waiver of such
provisions, we will disclose such amendment or waiver on our website at the same
address.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT AND NON-AUDIT FEES

        The following table sets forth the fees billed to us by our independent
auditors, Mancera, S.C., a member practice of Ernst & Young Global independent
registered public accounting firm, during the fiscal years ended December 31,
2004 and 2003:

                                                YEAR ENDED DECEMBER 31,
                                             ----------------------------
                                                 2004            2003
                                             ------------    ------------

Audit fees ...............................   Ps.2,698,629    Ps.3,495,007
Audit-related fees .......................             --              --
Tax fees .................................        711,200         691,274
All other fees ...........................             --              --
                                             ------------    ------------
Total fees ...............................   Ps.3,409,829    Ps.4,186,281
                                             ============    ============

        Audit fees in the above table are the aggregate fees billed by Mancera,
S.C. in connection with the audit of our annual financial statements and
statutory and regulatory audits.

        Tax fees in the above table are fees billed by Mancera, S.C. for
services related to tax refund claims.

                                       73
<PAGE>

AUDIT COMMITTEE APPROVAL POLICIES AND PROCEDURES

        Our audit committee has not established pre-approval policies and
procedures for the engagement of our independent auditors for services. Our
audit committee expressly approves on a case-by-case basis any engagement of our
independent auditors for audit and non-audit services provided to our
subsidiaries or to us.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

        Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
          PURCHASERS.

        Not applicable.

PART III.

ITEM 17. FINANCIAL STATEMENTS

        Not applicable.

ITEM 18. FINANCIAL STATEMENTS

        See the Audited Financial Statements including notes, incorporated
herein by reference.

ITEM 19.  EXHIBITS

        Documents filed as exhibits to this Form 20-F:

 EXHIBIT
   NO.                                     DESCRIPTION
--------        ----------------------------------------------------------------
    8.1         List of subsidiaries.

   12.1         Certification of the Chief Financial Officer pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002.

   12.2         Certification of the Chief Executive Officer pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002.

   13.1         Certification pursuant to Section 906 of the Sarbanes-Oxley Act
                of 2002.

                                       74
<PAGE>

                                    SIGNATURE

        Pursuant to the requirements of Section 12 of the Securities Exchanges
Act of 1934, the registrant certifies that it meets all requirements for filing
on Form 20-F and has duly caused this Annual Report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                            INDUSTRIAS BACHOCO, S.A. de C.V.

                                            By: /s/ DANIEL SALAZAR FERRER
                                                --------------------------------
                                                Daniel Salazar Ferrer
                                                Chief Financial Officer

Date: June 29, 2005

                                       75
<PAGE>

                        INDUSTRIAS BACHOCO, S.A. DE C.V.
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                                   Years ended
                        December 31, 2002, 2003 and 2004
                  With Report of Independent Registered Public
                                 Accounting Firm

<PAGE>

                        INDUSTRIAS BACHOCO, S.A. DE C.V.
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2003 AND 2004

                                     CONTENT

Report of Independent Registered Public Accounting Firm

Consolidated Financial Statements:

  Consolidated Balance Sheets
  Consolidated Statements of Income
  Consolidated Statements of Changes in Stockholders' Equity
  Consolidated Statements of Changes in Financial Position
  Notes to the Consolidated Financial Statements

                                       F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders of
Industrias Bachoco, S.A. de C.V.

We have audited the accompanying consolidated balance sheets of Industrias
Bachoco, S.A. de C.V. and subsidiaries as of December 31, 2003 and 2004, and the
related consolidated statements of income, changes in stockholders' equity and
changes in financial position for each of the three years in the period ended
December 31, 2004. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in Mexico and in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement and are prepared in conformity with
accounting principles generally accepted in Mexico. We were not engaged to
perform an audit of the Company's internal control over financial reporting. Our
audit included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Industrias Bachoco, S.A. de C.V., and subsidiaries at December 31, 2003 and
2004, and the consolidated results of their operations, their changes in
stockholders' equity and changes in their financial position for each of the
three years in the period ended December 31, 2004, in conformity with accounting
principles generally accepted in Mexico, which differ in certain respects from
those followed in the United States of America (see Note 17).

As mentioned in Note 2p to the accompanying consolidated financial statements,
effective January 1, 2003, the Company adopted the new requirements of Mexican
accounting Bulletin E-1, Agriculture, issued by the Mexican Institute of Public
Accountants. The effects are described in Note 3.

                                                     Mancera, S.C.
                                                  A Member Practice of
                                                  Ernst & Young Global


                                          C.P.C. Francisco Jose Sanchez Gonzalez

Mexico City, Mexico
March 18, 2005

                                       F-2
<PAGE>

                INDUSTRIAS BACHOCO, S.A. DE C.V. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

          (Thousands of constant Mexican pesos as of December 31, 2004)

<TABLE>
<CAPTION>
                                                                                 DECEMBER 31,
                                                             ---------------------------------------------------
                                                                                                  (Thousands of
                                                                                                  U.S. dollars)
                                                                                                    (Note 2)
                                                             ---------------   ---------------   ---------------
                                                                   2003              2004              2004
                                                             ---------------   ---------------   ---------------
<S>                                                          <C>               <C>               <C>
ASSETS

CURRENT ASSETS:
Cash and cash equivalents                                    Ps    1,650,659   Ps    2,338,102   $       209,620
                                                             ---------------   ---------------   ---------------
Accounts receivable:
  Trade, net                                                         421,480           379,835            34,054
  Value added and other recoverable taxes                            235,728           183,493            16,451
                                                             ---------------   ---------------   ---------------
Total accounts receivable                                            657,208           563,328            50,505
                                                             ---------------   ---------------   ---------------
Inventories, net - Note 3                                          1,621,597         1,453,879           130,346
Biological current assets -Note 3                                    173,044           171,438            15,370
Prepaid expenses and other current assets                             75,570            47,073             4,219
                                                             ---------------   ---------------   ---------------
Total current assets                                               4,178,078         4,573,820           410,060
                                                             ---------------   ---------------   ---------------
Property, plant and equipment, net - Note 4                        8,209,996         8,227,955           737,668
Biological non-current assets -Note 3                                346,765           329,830            29,571
Other assets                                                          12,017             9,108               817
Intangible assets - Note 10                                           13,008            24,874             2,230
Goodwill, net- Note 5                                                288,840           271,318            24,325
                                                             ---------------   ---------------   ---------------
TOTAL ASSETS                                                 Ps   13,048,704   Ps   13,436,905   $     1,204,671
                                                             ===============   ===============   ===============
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Notes payable to banks - Note 6                              Ps       33,083   Ps       75,350   $         6,755
Current portion of long-term debt - Note 6                            27,990            24,303             2,179
Accounts payable                                                     429,960           446,528            40,033
Related parties - Note 8                                               2,625             6,109               548
Income tax                                                            16,284            12,944             1,160
Other taxes payable and other accruals - Note 9                      153,384           188,021            16,857
                                                             ---------------   ---------------   ---------------
Total current liabilities                                            663,326           753,255            67,532
                                                             ---------------   ---------------   ---------------
LONG-TERM LIABILITIES:
Long-term debt - Note 6                                               97,681            72,535             6,503
Deferred income tax - Note 13                                      1,673,523         1,681,231           150,728
Labor obligations - Note 10                                           32,173            54,374             4,875
                                                             ---------------   ---------------   ---------------
TOTAL LIABILITIES                                                  2,466,703         2,561,395           229,638
                                                             ---------------   ---------------   ---------------
COMMITMENTS AND CONTINGENCIES- NOTE 11

STOCKHOLDERS' EQUITY - NOTE 12
Majority stockholders' equity
Capital stock                                                      2,057,083         2,056,877           184,407
Paid-in capital                                                      635,647           648,169            58,111
Reserve for repurchase company stock                                 176,754           153,203            13,735
Retained earnings                                                 11,401,160        11,717,065         1,050,481
Net income for the year                                              562,978           702,821            63,011
Minimum seniority premium liability adjustment  Note 10               (1,908)           (1,012)              (91)
Deficit from restatement of stockholders' equity                  (3,024,900)       (3,174,419)         (284,599)
Cumulative effect of deferred income tax -Note 13                 (1,268,318)       (1,268,318)         (113,710)
                                                             ---------------   ---------------   ---------------
Total majority stockholders' equity                               10,538,496        10,834,386           971,345
                                                             ---------------   ---------------   ---------------

Minority interest                                                     43,505            41,124             3,688
                                                             ---------------   ---------------   ---------------
Total stockholders' equity                                        10,582,001        10,875,510           975,033
                                                             ---------------   ---------------   ---------------
TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY                                                     Ps   13,048,704   Ps   13,436,905   $     1,204,671
                                                             ===============   ===============   ===============
</TABLE>

See accompanying notes.

                                       F-3
<PAGE>

                INDUSTRIAS BACHOCO, S.A. DE C.V. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

          (Thousands of constant Mexican pesos as of December 31, 2004)

<TABLE>
<CAPTION>
                                                                      YEARS ENDED DECEMBER 31,
                                                ----------------------------------------------------------------------
                                                                                                          (Thousands
                                                                                                            of U.S.
                                                                                                           dollars)
                                                                                                           (Note 2)
                                                --------------     --------------     --------------    --------------
                                                     2002               2003               2004              2004
                                                --------------     --------------     --------------    --------------
<S>                                             <C>                <C>                <C>               <C>
Net revenues                                    Ps  11,328,770     Ps  11,309,297     Ps  13,299,404    $    1,192,344
Cost of sales                                       (8,403,686)        (9,200,033)       (10,785,711)         (966,981)
                                                --------------     --------------     --------------    --------------
Gross profit                                         2,925,084          2,109,264          2,513,693           225,363
Selling, general and administrative expenses        (1,566,661)        (1,654,685)        (1,660,002)         (148,826)
                                                --------------     --------------     --------------    --------------
Operating income                                     1,358,423            454,579            853,691            76,537

Comprehensive financing income (cost):
  Interest income                                      118,152            162,822            101,842             9,130
  Interest expense                                     (34,321)           (26,021)          (121,508)          (10,894)
                                                --------------     --------------     --------------    --------------
  Net interest income (expense)                         83,831            136,801            (19,666)           (1,764)
  Foreign exchange gain, net                            45,354             72,576             45,052             4,039
  Loss on net monetary position                       (113,501)           (77,813)           (96,878)           (8,685)
                                                --------------     --------------     --------------    --------------
                                                        15,684            131,564            (71,492)           (6,410)
                                                --------------     --------------     --------------    --------------
Other income, net                                       44,197             23,515             30,865             2,767
                                                --------------     --------------     --------------    --------------

Income before income tax and asset tax,
employee profit sharing and cumulative effect
of change in accounting principle                    1,418,304            609,658            813,064            72,894

Income tax and asset tax - Note 13                     202,549           (111,412)          (103,456)           (9,275)
Employee profit sharing - Note 13                       (1,569)            (1,880)            (2,977)             (266)
                                                --------------     --------------     --------------    --------------
Income before cumulative effect of
 accounting change                                   1,619,284            496,366            706,631            63,353

Cumulative effect of change in accounting
 principle, net of taxes - Note 3                            -             71,093                  -                 -
                                                --------------     --------------     --------------    --------------
NET INCOME                                      Ps   1,619,284     Ps     567,459     Ps     706,631    $       63,353
                                                ==============     ==============     ==============    ==============
Majority net income                             Ps   1,617,100     Ps     562,978     Ps     702,821    $       63,011
Minority net income                                      2,184              4,481              3,810               342
                                                --------------     --------------     --------------    --------------
NET INCOME                                      Ps   1,619,284     Ps     567,459     Ps     706,631    $       63,353
                                                ==============     ==============     ==============    ==============

Weighted average units outstanding
 (in thousands)                                        297,898            299,369            299,630           299,630
                                                --------------     --------------     --------------    --------------
NET MAJORITY INCOME PER UNIT                    Ps        5.43     Ps        1.88     Ps        2.34    $          .21
                                                ==============     ==============     ==============    ==============
</TABLE>

See accompanying notes.

                                       F-4
<PAGE>

                INDUSTRIAS BACHOCO, S.A. DE C.V. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 2002, 2003 AND 2004
          (Thousands of constant Mexican pesos as of December 31, 2004)

<TABLE>
<CAPTION>
                                         NUMBER OF                                         RESERVE FOR
                                          UNITS OF                                         REPURCHASE
                                       CAPITAL STOCK                        PAID-IN        OF COMPANY        RETAINED
                                        (thousands)     CAPITAL STOCK       CAPITAL          STOCK           EARNINGS
                                      --------------   --------------   --------------   --------------   --------------
<S>                                          <C>       <C>              <C>              <C>              <C>
Balance at December 31, 2001                 298,154   Ps   2,056,105   Ps     554,455   Ps     222,507   Ps   9,163,989

Transfer of prior year's net income                -                -                -                -        1,245,117
Repurchase of stock                           (2,534)          (1,409)               -          (40,144)            (387)
Sales of repurchased stock                     1,846            1,026           29,706                -                -
Cash dividends paid                                -                -                -                -         (303,782)
Comprehensive income, net of tax                   -                -                -                -                -
                                      --------------   --------------   --------------   --------------   --------------
Balance at December 31, 2002                 297,466        2,055,722          584,161          182,363       10,104,937

Transfer of prior year's net income                -                -                -                -        1,617,100
Repurchase of stock                             (300)            (158)               -           (5,609)               -
Sales of repurchased stock                     2,834            1,519           51,486                -                -
Cash dividends paid                                -                -                -                -         (320,877)
Comprehensive income, net of tax                   -                -                -                -                -
                                      --------------   --------------   --------------   --------------   --------------
Balance at December 31, 2003                 300,000        2,057,083          635,647          176,754       11,401,160

Transfer of prior year's net income                -                -                -                -          562,978
Repurchase of stock                           (1,110)            (573)               -          (23,551)               -
Sales of repurchased stock                       710              367           12,522                -                -
Cash dividends paid                                -                -                -                -         (247,073)
Comprehensive income, net of tax                   -                -                -                -                -
                                      --------------   --------------   --------------   --------------   --------------
Balance at December 31, 2004
(Note 12)                                    299,600   Ps   2,056,877   Ps     648,169   Ps     153,203   Ps  11,717,065
                                      ==============   ==============   ==============   ==============   ==============

<CAPTION>
                                                          MINIMUM
                                                         SENIORITY       DEFICIT FROM      CUMULATIVE         TOTAL
                                            NET           PREMIUM       RESTATEMENT OF      EFFECT OF        MAJORITY
                                        INCOME FOR       LIABILITY       STOCKHOLDERS'      DEFERRED      STOCKHOLDERS'
                                         THE YEAR        ADJUSTMENT         EQUITY         INCOME TAX        EQUITY
                                      --------------   --------------   --------------   --------------   --------------
<S>                                   <C>              <C>              <C>              <C>              <C>
Balance at December 31, 2001          Ps   1,245,117   Ps        (725)  Ps  (2,887,954)  Ps  (1,268,318)  Ps   9,085,176

Transfer of prior year's net income       (1,245,117)               -                -                -                -
Repurchase of stock                                -                -                -                -          (41,940)
Sales of repurchased stock                         -                -                -                -           30,732
Cash dividends paid                                -                -                -                -         (303,782)
Comprehensive income, net of tax           1,617,100              (22)         (70,129)               -        1,546,949
                                      --------------   --------------   --------------   --------------   --------------
Balance at December 31, 2002               1,617,100             (747)      (2,958,083)      (1,268,318)      10,317,135

Transfer of prior year's net income       (1,617,100)               -                -                -                -
Repurchase of stock                                -                -                -                -           (5,767)
Sales of repurchased stock                         -                -                -                -           53,005
Cash dividends paid                                -                -                -                -         (320,877)
Comprehensive income, net of tax             562,978           (1,161)         (66,817)               -          495,000
                                      --------------   --------------   --------------   --------------   --------------
Balance at December 31, 2003                 562,978           (1,908)      (3,024,900)      (1,268,318)      10,538,496

Transfer of prior year's net income         (562,978)               -                -                -                -
Repurchase of stock                                -                -                -                -          (24,124)
Sales of repurchased stock                         -                -                -                -           12,889
Cash dividends paid                                -                -                -                -         (247,073)
Comprehensive income, net of tax             702,821              896         (149,519)               -          554,198
                                      --------------   --------------   --------------   --------------   --------------
Balance at December 31, 2004
(Note 12)                             Ps     702,821   Ps      (1,012)  Ps  (3,174,419)  Ps  (1,268,318)  Ps  10,834,386
                                      ==============   ==============   ==============   ==============   ==============

<CAPTION>
                                                            TOTAL
                                         MINORITY       STOCKHOLDERS'
                                         INTEREST          EQUITY
                                      --------------   --------------
<S>                                   <C>              <C>
Balance at December 31, 2001          Ps      46,164   Ps   9,131,340

Transfer of prior year's net income                -                -
Repurchase of stock                                -          (41,940)
Sales of repurchased stock                         -           30,732
Cash dividends paid                                -         (303,782)
Comprehensive income, net of tax              (1,210)       1,545,739
                                      --------------   --------------
Balance at December 31, 2002                  44,954       10,362,089

Transfer of prior year's net income                -                -
Repurchase of stock                                -           (5,767)
Sales of repurchased stock                         -           53,005
Cash dividends paid                                -         (320,877)
Comprehensive income, net of tax              (1,449)         493,551
                                      --------------   --------------
Balance at December 31, 2003                  43,505       10,582,001

Transfer of prior year's net income                -                -
Repurchase of stock                                -          (24,124)
Sales of repurchased stock                         -           12,889
Cash dividends paid                                -         (247,073)
Comprehensive income, net of tax              (2,381)         551,817
                                      --------------   --------------
Balance at December 31, 2004
(Note 12)                             Ps      41,124   Ps  10,875,510
                                      ==============   ==============
</TABLE>

See accompanying notes.

                                       F-5
<PAGE>

                INDUSTRIAS BACHOCO, S.A. DE C.V. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION

          (Thousands of constant Mexican pesos as of December 31, 2004)

<TABLE>
<CAPTION>
                                                                        YEARS ENDED DECEMBER 31
                                                  -----------------------------------------------------------------
                                                                                                       (Thousands
                                                                                                         of U.S.
                                                                                                         dollars)
                                                                                                        (Note 2)
                                                                                                     --------------
                                                       2002             2003             2004             2004
                                                  --------------   --------------   --------------   --------------
<S>                                               <C>              <C>              <C>              <C>
OPERATING ACTIVITIES:
Net income                                        Ps   1,619,284   Ps     567,459   Ps     706,631   $       63,353
Adjustments to reconcile net income to
  Resources provided by operating activities:
  Depreciation                                           346,719          384,220          420,275           37,679
  Deferred income tax                                   (257,045)          69,397           80,934            7,256
  Goodwill amortization                                   17,503           17,606           17,522            1,571
                                                  --------------   --------------   --------------   --------------
                                                       1,726,461        1,038,682        1,225,362          109,859

Changes in operating assets and liabilities:
  Accounts receivable                                     43,779          (56,174)          93,880            8,417
  Inventories and biological assets                     (111,766)        (319,863)         (42,678)          (3,826)
  Prepaid expenses and other current assets             (113,136)          93,432           28,498            2,555
  Accounts payable                                      (178,567)         143,072           16,568            1,485
  Related parties                                          3,933          (19,427)           3,484              312
  Taxes payable and other accruals                      (119,163)          28,199           31,297            2,806
   Labor obligations, net                                 (8,430)           2,428           11,231            1,006
                                                  --------------   --------------   --------------   --------------
RESOURCES PROVIDED BY OPERATING ACTIVITIES             1,243,111          910,349        1,367,642          122,614

FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt                       -           41,039            4,074              365
Proceeds from issuance of notes payable to banks          54,687           77,211          310,895           27,873
Repayment of long-term debt and notes payable           (178,585)        (160,423)        (293,701)         (26,331)
Constant pesos effect on notes payable to banks
 and long term-debt                                      (18,972)          (7,990)          (7,834)            (702)
Cash dividends paid                                     (303,782)        (320,877)        (247,073)         (22,151)
Sales (repurchases) of Company's own stock, net          (11,208)          47,238          (11,235)          (1,007)
                                                  --------------   --------------   --------------   --------------
RESOURCES USED IN FINANCING ACTIVITIES                  (457,860)        (323,802)        (244,874)         (21,953)

INVESTING ACTIVITIES:
Acquisition of property, plant and equipment, net       (288,692)        (794,828)        (438,234)         (39,289)
Other assets                                               6,169            3,968            2,909              261
                                                  --------------   --------------   --------------   --------------
RESOURCES USED IN INVESTING ACTIVITIES                  (282,523)        (790,860)        (435,325)         (39,028)
                                                  --------------   --------------   --------------   --------------
NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                                    502,728         (204,313)         687,443           61,633
CASH AND CASH EQUIVALENTS AT
 BEGINNING OF YEAR                                     1,352,244        1,854,972        1,650,659          147,987
                                                  --------------   --------------   --------------   --------------
CASH AND CASH EQUIVALENTS AT
 END OF YEAR                                      Ps   1,854,972   Ps   1,650,659   Ps   2,338,102   $      209,620
                                                  ==============   ==============   ==============   ==============
</TABLE>

See accompanying notes.

                                       F-6
<PAGE>

                        INDUSTRIAS BACHOCO, S.A. DE C.V.
                                AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                  YEARS ENDED DECEMBER 31, 2002, 2003 AND 2004

                   (Thousands of constant Mexican pesos as of
                   December 31, 2004, except per unit amounts)

1.  ORGANIZATION AND BUSINESS ACTIVITY

Industrias Bachoco, S.A. de C.V. and subsidiaries (collectively "Bachoco" or the
"Company") are engaged in the breeding, processing and marketing of poultry
(chicken and eggs) swine and other products (principally feed). Poultry sales
represent 90%, 89% and 90% of net revenues for the years ended December 31,
2002, 2003 and 2004, respectively. All sales activities are carried out in
Mexico, mainly through retailers, wholesalers and self-service outlets.

2.  ACCOUNTING POLICIES AND PRACTICES

The accompanying consolidated financial statements are prepared in conformity
with accounting principles generally accepted in Mexico ("Mexican GAAP"). The
accounting policies and practices followed by Bachoco in the preparation of its
consolidated financial statements are the following:

a) ESTIMATES IN FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.

b) CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
all of its majority-owned subsidiaries. The ownership interests of other
stockholders in such subsidiaries are reflected as minority interest.
Intercompany balances, investments and transactions have been eliminated in
consolidation.

                                       F-7
<PAGE>

The accompanying consolidated financial statements include the following
consolidated subsidiaries as of December 31, 2002, 2003 and 2004:

<TABLE>
<CAPTION>
                                                      PERCENTAGE EQUITY INTEREST
                                                    ------------------------------
                                                      2002       2003       2004
                                                    --------   --------   --------
                                                        %          %          %
<S>                                                      <C>        <C>        <C>
Acuicola Bachoco, S.A. de C.V.                           100        100        100
Aviser, S.A. de C.V.                                     100        100        100
Bachoco, S.A. de C.V. ("BSACV")                          100        100        100
Campi Alimentos, S.A. de C.V.                              -        100        100
Campi Comercial, S.A. de C.V                             100          -          -
Huevo y Derivados, S.A. de C.V.                           97         97         97
Operadora de Servicios de Personal, S.A. de C.V.         100        100        100
Pecuarius Laboratorios, S.A. de C.V.                      64         64         64
Secba, S.A. de C.V.                                        -          -        100
Sepetec, S. A. de C.V.                                   100        100        100
Servicios de Personal Administrativo, S.A. de C.V.       100        100        100
</TABLE>

In November 2004, the Company acquired all the shares of Secba, S.A. de C.V.
from a related party for Ps 13,905. As of the date of the acquisition, the
figures of Secba, S.A. de C.V. have been consolidated with the Company's
figures. The excess of the purchase price paid over the book value of this
investment amounted Ps 330 was taken other income.

In April 2002, the subsidiary Secba, S.A. de C.V. was sold for Ps 5,551 to a
related party generating a gain of Ps 790, which is included in other income;
consequently, this subsidiary's figures were not consolidated from the date of
sale. Secba, S.A. de C.V. continued to render administrative services to the
Company. The effects of the deconsolidation of this subsidiary were immaterial
and did not affect the comparability of the accompanying financial statements.

In December 2003, Campi Comercial, S.A. de C.V. merged into BSACV (the surviving
company). After the merger, a spin-off from BSACV was approved to create a new
company known as Campi Alimentos, S.A. de C.V. The aforementioned transactions
had no effect on the consolidated amounts.

c) RECOGNITION OF THE EFFECTS OF INFLATION ON FINANCIAL INFORMATION

The Company recognizes the effects of inflation on financial information as
required by Mexican Accounting Principles Bulletin B-10, "Accounting Recognition
of the Effects of Inflation on Financial Information", issued by the Mexican
Institute of Public Accountants (the "Mexican Institute"). Consequently, the
amounts shown in the accompanying financial statements and in these notes are
expressed in thousands of constant Mexican pesos as of December 31, 2004. The
December 31, 2004 restatement factor applied to the financial statements at
December 31, 2002 and 2003 was 1.0937 and 1.0520, which represent the rate of
inflation from December 31, 2002 and December 31, 2003 up to December 31, 2004,
respectively, based on the Mexican National Consumer Price Index (NCPI)
published by Banco de Mexico (the Central Bank).

                                       F-8
<PAGE>

Property, plant and equipment were carried at replacement cost, determined
annually by an independent appraiser, through 1996. The fifth amendment to
Bulletin B-10 (as modified), which is applicable to financial statements for
periods beginning on or after January 1, 1997, disallows the use of appraisals.
Based on such amendment, the Company restated the appraisal value at December
31, 1996 and property, plant and equipment purchases since January 1, 1997 are
carried at cost adjusted by the NCPI. Comprehensive financing cost related to
the construction in progress, is capitalized during the installation or
preoperating period and amortized over the estimated useful lives of the assets.

Depreciation of property, machinery and equipment is computed on restated values
using the straight-line method, based on the estimated useful lives of the
related assets (see Note 4).

Inventories are valued at average cost of acquisition or production, which
approximates estimated replacement cost, not in excess of net realizable value.

Other non monetary assets were restated using adjustment factors obtained from
the NCPI.

Capital stock, paid-in capital, reserve for stock repurchase of Company's own
shares and retained earnings were restated using adjustment factors obtained
from the NCPI.

The deficit from restatement of stockholders' equity comprises the accumulated
monetary position loss at the time the provisions of Bulletin B-10 were first
applied and the subsequent gain or loss from holding nonmonetary assets,
principally property, plant and equipment and inventories. A gain or loss from
holding nonmonetary assets originates when the replacement cost of these assets
is higher or lower than the cost of these assets restated by the NCPI.

The net monetary gain (loss) represents the impact of inflation on monetary
assets and liabilities. The net monetary gain (loss) of each year is included in
the statements of income as a part of the comprehensive financing income (cost).

The comprehensive financing income includes interest earned and paid, as well as
the results of exchange differences and the gain or loss on monetary position.

Bulletin B-12, "Statement of Changes in Financial Position", specifies the
appropriate presentation of the statement of changes in financial position based
on financial statements restated in constant pesos in accordance with Bulletin
B-10. Bulletin B-12 identifies the sources and applications of resources
representing differences between beginning and ending financial statement
balances in constant pesos. In accordance with this bulletin, monetary and
foreign exchange gains and losses are not treated as noncash items in the
determination of resources provided by operations.

d) CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist basically of bank deposits and highly liquid
investments with maturities of less than 90 days. Such investments are stated at
acquisition cost plus accrued interest, similar to market value.

                                       F-9
<PAGE>

e) ACCOUNTS RECEIVABLE

The Company periodically and systematically reviews the aging and collection of
its accounts receivable. As a result of this procedure, the Company set up an
allowance for doubtful accounts of Ps 40,105 and Ps 35,130 as of December 31,
2003 and 2004, respectively.

The recoverable value added tax is related to purchases of certain raw
materials, property, plant and equipment and services charged by suppliers,
which is subject to reimbursement.

f) CONCENTRATION OF RISK

The Company invests a portion of its surplus cash in cash deposits in financial
institutions with strong credit ratings and has established guidelines related
to diversification and maturities that the Company believes maintains safety and
liquidity. The Company has not experienced any losses on its cash equivalents.
The Company does not believe it has significant concentrations of credit risks
in its accounts receivable, because the Company's customer base is
geographically diverse, thus spreading the credit risk.

g) LABOR OBLIGATIONS

Under Mexican labor law, employees are entitled to a compensation payment
("seniority premium") upon death, dismissal or at retirement after 15 or more
years of service. The Company accounts for this obligation in accordance with
Bulletin D-3 Labor Obligations issued by the Mexican Institute; consequently,
seniority premium costs are recognized periodically during the years of service
by employees, based on actuarial computations.

Also, in accordance with Mexican labor law, the Company is contingently liable
for severance payments to employees who are unjustifiably dismissed. Such
payments are charged to income in the year in which the decision to dismiss an
employee is made.

Bachoco has established a defined benefit pension plan which has been accounted
for in accordance with the requirements of Bulletin D-3. This Bulletin defines,
among other things, the accounting treatment of pensions and seniority premiums.

Bachoco implemented a defined benefit retirement pension plan that covers all
non-unionized employees. Participating employees are required to contribute with
a minimum of 1% of their salary. Such percentage may be increased based on years
of service up to a maximum of 5%.

h) INCOME TAXES AND EMPLOYEE PROFIT SHARING

The Company recognizes deferred taxes on all temporary differences in balance
sheet accounts for financial and tax reporting purposes, using the enacted
income tax rate at the balance sheet date of the lastest financial statements
issued, as required by Mexican accounting Bulletin D-4, "Accounting for Income
Tax, Asset Tax and Employee Profit Sharing", issued by the Mexican Institute.

The annual change in the deferred tax liability is presented in the statement of
operations, except for the portion that corresponds to the holding of
non-monetary assets, which is to be presented under stockholders' equity and has
been included in the deficit from holding non-monetary assets.

                                      F-10
<PAGE>

Current year income tax is charged to results of operations and represents a
liability due and payable in less than one year.

The Company evaluates periodically the possibility of recovering deferred tax
assets and if necessary, establishes a reserve.

Bulletin D-4 requires that asset tax be included in the deferred income tax
balance, after consideration of its recovery.

In conformity with this Bulletin, deferred employee profit sharing should be
recognized only on temporary differences determined in the reconciliation of
current year net income for financial and tax reporting purposes, provided there
is no indication that the related liability or asset will not be realized in the
future.

Current year employee profit sharing is charged to results of operations and
represents a liability due and payable in a period of less than one year.

The accumulated deferred income tax effect included in stockholders' equity
corresponds to the deferred income tax determined at the time the requirements
of Bulletin D-4 were first applied, which was Ps 1,268,318.

i) REVENUE RECOGNITION

Revenue is recognized as earned, when all of the following criteria are met:

- Persuasive evidence of an arrangement exists
- Delivery has occurred
- The seller's price to the buyer is fixed or determinable
- Collectibility is reasonably assured

j) NET INCOME PER UNIT

Net income per unit has been computed based on majority net income and on the
weighted average number of units outstanding.

k) COMPREHENSIVE INCOME

As established in Mexican accounting Bulletin B-4, "Comprehensive Income",
comprehensive income consists of the net income, plus the result from holding
non-monetary assets and the effect of deferred taxes applied directly to
stockholders equity, minimum seniority premium liability adjustment and the
effect of minority interest.

l) FINANCIAL INSTRUMENTS

In order to reduce its financial costs, the Company uses financial instruments
(derivatives), which are valued using the same method as the one used to value
the assets and liabilities being hedged. The valuation effect of such
instruments is recognized in the statement of income, net of costs, expenses or
income derived from the hedged assets and liabilities. These instruments not
acting as hedges are presented at market value and gains and losses resulting
from changes in such market values are recorded in results of operations, as
required by Mexican accounting Bulletin C-2, Financial Instruments, issued by
the Mexican Institute. The market value of financial instruments has been
included in cash equivalents due to its immateriality (Ps 6,614 in 2003 and Ps
14,235 in 2004).

                                      F-11
<PAGE>

m) CAPITALIZED SOFTWARE

The Company capitalizes software development when the product under development
has reached technological feasibility. Costs incurred prior to the establishment
of technological feasibility are charged to product development expense.

The Company capitalizes qualifying internal and external costs incurred during
the application development stage. Costs incurred during the preliminary project
stage and post implementation stage/operation stage are expensed as incurred.

n) GOODWILL

Goodwill represents the excess of the purchase price paid for acquired
subsidiaries and affiliates over the fair value of the net assets acquired.
Goodwill is amortized using the straight-line method over a twenty-year period.
Amortization will be discontinued in 2005 on explained after under paragraph
Note 2v.

o) FOREIGN EXCHANGE DIFFERENCES

Transactions in foreign currency are recorded at the prevailing exchange rate on
the day of the related transactions. Foreign currency denominated assets and
liabilities are translated at the prevailing exchange rate at the balance sheet
date. Exchange differences determined from such date to the time foreign
currency denominated assets and liabilities are settled or translated at the
balance sheet date are charged or credited to operations.

See Note 15 for the Company's foreign currency position at the end of each year
and the exchange rates used to translate foreign currency denominated balances.

p) AGRICULTURE

Effective January 1, 2003, the Company adopted the requirements of Mexican
accounting Bulletin E-1, Agriculture, which establishes the rules for
recognizing, valuing, presenting and disclosing biological assets and
agricultural products, it also establishes the treatment to be given to
government subsidies on biological assets.

This bulletin establishes that biological assets and agricultural products (the
latter at the time of their harvesting) are to be valued at their fair value,
net of estimated costs at point of sale. Also, the Bulletin establishes that
whenever the fair value cannot be determined in a reliable, verifiable and
objective manner, the assets are to be valued at their production cost, net of
accumulated impairment.

The Company's biological assets consist of poultry in its different stages,
incubatable eggs and breeding pigs. Agricultural products are processed chicken,
commercial eggs and commercial pigs.

Poultry being fattened (with less than 6.5 weeks old), incubatable eggs for
fattening, pigs and laying hens, are valued at production cost since it is not
possible to determine their fair value in a reliable, verifiable and objective
manner.

Poultry being fattened from age 6.5 weeks to the time birds are ready for sale,
is valued at fair value net of estimated costs at point of sale, considering the
sales price per kilogram of processed chicken at the date of valuation.

                                      F-12
<PAGE>

Laying hens are depreciated based on eggs produced using an estimated factor for
productive useful life.

Processed chicken and commercial eggs, are valued at their fair value net of
costs at point of sale, considering the sales price per kilogram of processed
chicken and commercial eggs at the time such items are considered agricultural
products, from this date, the valuation is considered to be cost up to the time
of sale, not in excess of net realizable value.

The Company is exposed to financial risks due to changes in the price of
chicken. The Company does not expect any significant decrease in the price of
chicken in the future; therefore it has not contracted any financial instruments
(derivatives) or any other hedges against the risk of a decrease in the price of
chicken.

The Company frequently reviews the prices of chicken to determine the need for a
financial asset to address the risk.

With the adoption of the requirements of Bulletin E-1, biological assets and
agricultural products were classified as current and non-current assets
depending on their availability and the business cycle.

q) INTANGIBLE ASSETS

Effective January 1, 2003, the Company adopted the requirements of Mexican
accounting Bulletin C-8, Intangible Assets, issued by the Mexican Institute.
Bulletin C-8 specifies, among other things, that project development costs are
to be capitalized if they meet certain established requirements with respect to
their recognition as assets. Pre-operating costs are to be recognized as an
expense of the period and intangible assets with indefinite useful lives, are
not to be amortized, but instead evaluated annually for impairment. Unamortized
balances of pre-operating expenses capitalized through December 31, 2003 in
terms of the previous Bulletin C-8, are to continue to be amortized as specified
in such bulletin. The effects of the adoption of this new bulletin were not
material for the Company.

r) LIABILITIES, PROVISIONS, CONTINGENT ASSETS AND LIABILITIES AND COMMITMENTS

Effective January 1, 2003, the Company adopted the requirements of Mexican
accounting Bulletin C-9, Liabilities, Provisions, Contingent Assets and
Liabilities and Commitments, issued by the Mexican Institute. This bulletin is
more precise in defining provisions, accrued liabilities and contingent
liabilities, the use of the present value and the early retirement of debt
securities or their replacement by a new issue. Such bulletin establishes the
rules for valuing and presenting liabilities, as well as provisions.

                                      F-13
<PAGE>

s) SEGMENTS

Requirements of Bulletin B-5, Segments, issued by the Mexican Institute of
Public Accountants, went into effect in April 2003. This bulletin establishes
the rules for disclosing financial information by segment. Bulletin B-5 cancels
the supplementary requirements of International Accounting Standard No. 14,
which applied through December 31, 2002. In the case of the Company, Bulletin
B-5 and the International Accounting Standard are the same.

Financial information by segment is prepared based on a management's approach,
in conformity with Bulletin B-5, considering a segment to be an operating
component that is subject to risks and benefits that are different from other
business segments.

The financial information by activity is disclosed in Note 14. The financial
information related to clients is not disclosed, as such information is not
available.

t) ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS

Effective January 1, 2004, the Company adopted the requirements of Mexican
accounting Bulletin C-15, Accounting for the Impairment or Disposal of
Long-lived Assets, issued by the Mexican Institute in March 2003.

Bulletin C-15 establishes that if there are any indications of impairment in the
value of long-lived assets, the related loss should be determined based on the
recovery value of the related asset, which is defined as the difference between
the asset's net selling price and its carrying amount. An impairment loss is
recognized if the net carrying amount of the asset exceeds the recovery value.

The application of this new pronouncement had no effect on the Company's
financial position or on its results of operations.

u) FINANCIAL INSTRUMENTS

In April 2003, the Mexican Institute of Public Accountants issued Bulletin C-12,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity, the objective of which is to specify the differences
between liabilities and equity. Bulletin C-12 also establishes the rules for
classifying and valuing the initial recognition of the components of liabilities
and equity of combined instruments, as well as the rules for disclosing such
financial instruments. The observance of Bulletin C-12 is compulsory for fiscal
years beginning on or after January 1, 2004. Company management has concluded
that the adoption of this new accounting pronouncement does not have any effect
on the Company's financial position or on its results of operations, since the
Company has not entered into any agreements involving financial instruments.

                                      F-14
<PAGE>

v) NEW ACCOUNTING PRONOUNCEMENTS

Business acquisitions

In May 2004, the Mexican Institute issued Mexican accounting Bulletin B-7,
Business Acquisitions. The observance of Bulletin B-7 is mandatory for fiscal
years beginning on or after January 1, 2005, although earlier observance is
recommended. Bulletin B-7 addresses the financial accounting and reporting for
business and entity acquisitions and requires that all business combinations be
accounted for using only the purchase method. Bulletin B-7 also eliminates the
amortization goodwill and provides specific rules related to the acquisition of
minority interest and to the transfer of net assets or exchange of equity
interests between entities under common control.

Management believes that the adoption of this accounting pronouncement will
increase the Company's net income in 2005 by Ps 17,522, derived from the
elimination of goodwill amortization.

Financial instruments

In April 2004, the Mexican Institute amended Mexican accounting Bulletin C-2,
Financial Instruments. The amendments establish that changes in the fair value
of instruments classified as available for sale be disclosed in the holder's
stockholders' equity. The amended Bulletin C-2 also provides the requirements
and rules for the accounting treatment of transfers between financial asset
categories. The amendments are also more precise in establishing the guidelines
for the accounting treatment to be given to impairment in the fair value of
financial instruments. Furthermore, the amended bulletin requires that such
instruments be classified as either short-term or long-term and clarifies the
rules for presenting in the statement of changes in financial position changes
associated with the purchase, sale and maturity of financial instruments.
Finally, the amendments broaden the disclosure rules established under Bulletin
C-2.

The observance of the amendments to Bulletin C-2 is mandatory for fiscal years
beginning on or after January 1, 2005, although earlier observance is permitted.
Management does not believe the adoption of this new accounting requirement will
have a material effect on the Company's financial position or on its results of
operations.

Accounting for derivative instruments and hedging activities

In April 2004, the Mexican Institute issued Bulletin C-10, Accounting for
Derivative Instruments and Hedging Activities. Bulletin C-10 establishes the
defining characteristics that financial instruments must have to be considered
derivatives, as well as the conditions that must be met for specifically
designating derivatives as hedges. Bulletin C-10 also provides guidelines for
assessing the effectiveness of hedging derivatives and the rules for their
valuation and the accounting for changes in their fair value. Finally, this
bulletin provides guidelines for disclosing and presenting hedges in the
financial statements. Management does not believe the adoption of this new
accounting requirement will have a material effect on the Company's financial
position or on its results of operations.

                                      F-15
<PAGE>

Labor Obligations

In January 2004, the Mexican Institute issued the revised accounting Bulletin
D-3, Labor Obligations. The revised bulletin establishes the overall rules for
the valuation, presentation and disclosure of so-called "other post-retirement
benefits and the reduction and early extinguishment of such benefits", thus
nullifying the provisions of Circular 50. Bulletin D-3 also provides rules
applicable to employee termination pay. The observance of these new rules is
mandatory for fiscal years beginning on or after January 1, 2005. Management
does not believe the adoption of this new accounting requirement will have a
material effect on the Company's financial position or on its results of
operations.

w) CONVENIENCE TRANSLATION

United States dollar amounts as of December 31, 2004, shown in the accompanying
consolidated financial statements, have been included solely for the convenience
of the reader and are translated from Mexican pesos to US dollars as a matter of
arithmetic computation only, at an exchange rate of Ps 11.154 to one U.S.
dollar, which was the exchange rate at December 31, 2004. Such translation
should not be construed as a representation that the Mexican peso amounts could
have been or could be converted into U.S. dollars at this or any other rate.

x) RECLASSIFICATIONS

Some amounts shown in the 2002 and 2003 financial statements have been
reclassified for uniformity of presentation with 2004.

3. INVENTORIES AND BIOLOGICAL ASSETS

a) Inventories consist of the following:

                                                 2003              2004
                                            --------------    --------------
  Raw materials and byproducts              Ps     691,205    Ps     629,085
  Medicine, materials and spare parts              238,815           286,934
  Finished feed                                     35,565            30,708
                                            --------------    --------------
                                                   965,585           946,727
                                            --------------    --------------
Agricultural products:
  Live chicken                                     422,261           387,052
  Processed chicken                                212,609           102,745
  Commercial egg                                    21,142            17,355
                                            --------------    --------------
                                                   656,012           507,152
                                            --------------    --------------
Total                                       Ps   1,621,597    Ps   1,453,879
                                            ==============    ==============

                                      F-16
<PAGE>

b) Biological assets at December 31, 2003 and 2004 consist of the following:

Current biological assets                      2003             2004
                                          -------------    -------------
   Breeder chicken                        Ps    102,640    Ps    101,679
   Breeder pigs                                  18,268           15,848
   Incubatable eggs for fattening                52,136           53,911
                                          -------------    -------------
Total current biological assets                 173,044          171,438
                                          -------------    -------------
Non-current biological assets
   Laying and breeder hens                       37,367           50,302
   Incubatable eggs for laying hens               1,471            1,610
   Pigs                                          26,348           26,608
   Laying hens                                  438,139          434,894
   Allowance for productivity declines         (156,560)        (183,584)
                                          -------------    -------------
Total non-current biological assets             346,765          329,830
                                          -------------    -------------
Total inventories and biological assets   $   2,141,406    $   1,955,147
                                          =============    =============

c) The cumulative effect of the adoption of Mexican accounting Bulletin E-1 at
January 1, 2003 resulted in an increase of biological assets for Ps 84,634 (Ps
71,093 net of taxes), which is presented in the consolidated statement of income
as a cumulative effect of accounting change.

The increase in the historical cost of biological assets and agricultural
products to bring them to their fair value at December 31, 2003 aggregated Ps
61,984. The difference between fair values of beginning and ending inventories
of Ps 22,650 was recognized in the net revenues caption in the consolidated
statement of income.

Had Bulletin E-1 been in force before January 1, 2002, the unaudited pro forma
net revenues, net income and net income per unit would be as follows:

<TABLE>
<CAPTION>
                                                  2002               2003              2004
                                            ---------------    ---------------   ---------------
<S>                                         <C>                <C>               <C>
Net revenues as reported                    Ps   11,328,770    Ps   11,309,297   Ps   13,299,404
Effect of valuation at fair value
   of biological assets and agricultural
   products                                         (12,540)                 -                 -
                                            ---------------    ---------------   ---------------
Pro forma net revenues                      Ps   11,316,230    Ps   11,309,297   Ps   13,299,404
                                            ===============    ===============   ===============
Net income as presented                     Ps    1,619,284    Ps       567,459  Ps      706,631
Effect of valuation at fair value
   of biological assets and agricultural
   products net of taxes                            (11,827)                 -                 -
Minority interest                                    (2,184)                 -                 -
                                            ---------------    ---------------   ---------------
Pro forma net income                        Ps    1,605,273    Ps      567,459   Ps      706,631
                                            ===============    ===============   ===============

Net income per unit as report               Ps         5.43    Ps         1.88   Ps         2.34
Pro forma net income per unit as reported              5.39               1.88              2.34
</TABLE>

                                      F-17
<PAGE>

4.  PROPERTY, PLANT AND EQUIPMENT

a) Property, plant and equipment consists of the following as of December 31:

<TABLE>
<CAPTION>
                                              USEFUL LIVES           2003              2004
                                            ---------------    ---------------   ---------------
<S>                                                   <C>      <C>               <C>
Land                                                      -    Ps      688,287   Ps      704,704
Buildings, farm structures and                         8-28
  equipment                                           years         10,523,640        10,968,194
Office, furniture and equipment                           3            213,070           219,439
Transportation equipment                                  7          1,091,199         1,066,783
                                                               ---------------   ---------------
                                                                    12,516,196        12,959,120
Accumulated depreciation                                            (4,590,949)       (4,922,140)
                                                               ---------------   ---------------
Net                                                                  7,925,247         8,036,980
Construction in progress                                               284,749           190,975
                                                               ---------------   ---------------
Total                                                          Ps    8,209,996   Ps    8,227,955
                                                               ===============   ===============
</TABLE>

b) As described in Note 2, the Company capitalizes comprehensive financing cost
on assets under construction during the construction period. In 2002, 2003 and
2004, there was no capitalization of net financing cost.

c) Depreciation expense for the years ended December 31, 2002, 2003 and 2004,
was Ps 346,719, Ps 384,220 and Ps 420,275, respectively.

5. GOODWILL

Goodwill was generated in 1999, as a result of acquiring the shares of Grupo
Campi, S.A. de C.V., for the amount of Ps 359,291. At December 31, 2003 and
2004, accumulated amortization aggregates Ps 70,451 and Ps 87,973, respectively.

Amortization expense for the years ended December 31, 2002, 2003 and 2004, was
Ps 17,503, Ps 17,606 and Ps 17,522, respectively.

6.  NOTES PAYABLE TO BANKS AND LONG-TERM DEBT

a) Notes payable to banks and long-term debt, as of December 31, consists of the
following:

                                               2003             2004
                                          -------------    -------------
Unsecured notes payable to banks:
Denominated in Mexican pesos, interest
  rate  2003 and 2004: CETES FIRA rate
  less 3.5 points.                        Ps     33,083    Ps     35,350
Denominated in Mexican pesos, interest
  rate: TIIE FIRA rate less .75 points                -           40,000
                                          -------------    -------------
Total notes payable to bank               Ps     33,083    Ps     75,350
                                          =============    =============

                                      F-18
<PAGE>

The weighted average interest rate on short-term notes payable at December 31,
2003 and 2004 was 2.50% and 4.93%, respectively.

<TABLE>
<CAPTION>
                                                               2003               2004
                                                         ---------------    ---------------
<S>                                                      <C>                <C>
Long-term debt to banks:
Secured by equipment:
  Denominated in Mexican pesos,
  repayable in monthly instalments:
  Through 2010, at CETES rate plus 2 points              Ps       64,061    Ps       55,000
  Maturing in 2005, at interbank equilibrium
  (TIIE) rate plus 4 points or CETES rate plus 2
   points                                                          8,653              4,117
  Maturing in 2007, fix rate of 10.45%                            48,212             33,340
Unsecured:
  Maturing in 2004
  LIBOR rate plus 20%                                              4,320                  -
  Maturing in 2005
  LIBOR rate plus 20%                                                425                402
  Denominated in Mexican pesos, at TIIE FIRA
  rate less 3.30 points, with minimum rate of 2.70%                    -              3,979
                                                         ---------------    ---------------
Total                                                            125,671             96,838
Less current portion                                             (27,990)           (24,303)
                                                         ---------------    ---------------
Total long-term debt                                     Ps       97,681    Ps       72,535
                                                         ===============    ===============
</TABLE>

Weighted average interest rates on long-term debt at December 31, 2003 and 2004
were approximately 8.11% and 9.35%, respectively. The weighted average interest
rate on the Company's total debt at December 31, 2003 and 2004 was 6.94% and
7.18%, respectively.

b) At December 31, 2003 and 2004, unused lines of credit totaled Ps 1,266,773
and Ps 944,213, respectively. In 2003 and 2004, the Company did not pay any fee
for unused lines of credit.

c) The book value of assets collateralizing long-term debt was Ps 252,101 at
December 31, 2003 and Ps 243,032 at December 31, 2004.

d) Maturities of long-term debt as of December 31, 2004 are as follows:

                YEAR          AMOUNT
                ----       ------------
                2006       Ps    20,793
                2007             17,662
                2008             10,022
                2009             11,811
                2010             12,247
                           ------------
                           Ps    72,535
                           ============

                                      F-19
<PAGE>

7.  FINANCIAL INSTRUMENTS

During 2003 and 2004, the Company has observed different strategies with respect
to derivatives.

At December 31, 2003, the Company had entered into exchange-rate options, which
expired during 2004. At December 31, 2003, the Company had a call option of $
35,239 (thousand of usd), for which the Company paid a premium of Ps 17,760, as
well as put options of $ 89,040 (thousand of usd), for which the Company
received a premium of Ps 22,111. Considering the fair value of these
transactions, the closing of the call-option position was Ps 18,039 and the put-
option position was Ps 15,775, thus giving rise to a gain of Ps 6,614, which was
recorded in the caption foreign exchange gain, net.

At December 31, 2004, the Company maintains positions in the following financial
instrument derivatives:

<TABLE>
<CAPTION>
    FINANCIAL INSTRUMENT                            NOTIONAL AMOUNT /     MARKET VALUE GAIN
        DERIVATIVES            TYPE    POSITION    NUMBER OF CONTRACTS          (loss)
---------------------------    ----    --------    -------------------    -----------------
<S>                            <C>       <C>             <C>              <C>
Exchange rate options          Put       Short           Usd.   35,200    Ps         (8,738)
Exchange rate options          Put       Long            Usd   134,100               27,439
Exchange rate options          Call      Short           Usd   148,420              (24,851)
Exchange rate options          Call      Long            Usd   161,220               23,645
Corn, bean and soy futures               Short                     374               (1,291)
Corn, bean and soy futures               Long                      329                1,623
Corn, bean and soy  options    Put       Short                     441               (1,298)
Corn options                   Call      Long                      160                  202
Peso futures                             Long                      500                1,602
Peso futures                             Short                     500               (1,115)
Peso options                   Put       Short                     125                 (452)
Peso options                   Put       Long                      125                  820
Peso options                   Call      Short                     295               (3,351)
                                                                          -----------------
Total                                                                     Ps         14,235
                                                                          =================
</TABLE>

At December 31, 2003 and 2004, the derivative financial instruments were valued
at their market value, because they do not qualify as hedges, based on rules
established by Bulletin C-2.

                                      F-20
<PAGE>

8.  RELATED PARTIES

a) A summary of related party accounts payable as of December 31, is as follows:

<TABLE>
<CAPTION>
                                                        RELATION           2003              2004
                                                       -----------     -------------     -------------
<S>                                                    <C>             <C>               <C>
Llantas y Accesorios, S.A. de C.V.                     Affiliate       Ps          -     Ps         25
Maquinaria Agricola, S.A. de C.V.                      Affiliate                   -               113
Vimifos, S.A. de C.V.                                  Affiliate               2,563             5,920
Autos y Accesorios, S.A. de C.V.                       Affiliate                  62                51
                                                                       -------------     -------------
                                                                       Ps      2,625     Ps      6,109
                                                                       =============     =============
</TABLE>

All of these companies are considered as related parties, as the Company's main
shareholders are also directly or indirectly, shareholders of these companies.

b) For the years ended December 31, 2002, 2003 and 2004, the Company had the
following transactions with related parties:

<TABLE>
<CAPTION>
                                                           2002            2003              2004
                                                       -----------     -------------     -------------
<S>                                                    <C>             <C>               <C>
Airplane leasing expenses                              Ps    3,702     Ps      4,776     Ps      2,731
Purchases of vehicles, tires and spare parts                52,558            49,788            37,787
Purchases of feed, raw materials and
 packing supplies                                          107,088           161,108           195,992
Administrative services                                    335,199           350,855           346,240
</TABLE>

c) BSACV has an open contract with Secba, S.A. de C.V., in which the latter
provides administrative services, including management and operations services.
The amount of the consideration paid is determined as a function of expenses
incurred by Secba, S.A. de C.V. for the rendering of the services. As of the
date of acquisition of the shares of Secba, operations with this subsidiary are
eliminated in the consolidated financial statements.

9. OTHER TAXES PAYABLE AND OTHER ACCRUALS

a) An analysis of other taxes payable and other accruals presented in the
financial statements is as follows:

                                                     2003             2004
                                                 -----------     -------------
Expenses payable                                 Ps  103,217     Ps    101,999
Interest payable                                         237             1,386
Tax payable                                            2,308             5,238
Salaries payable                                       8,839            16,537
Rights payable                                        14,388            18,086
Social Securities                                     17,454            20,996
Employee profit sharing                                2,454             3,645
Other accounts payable                                 4,487            20,134
                                                 -----------     -------------
Total                                            Ps  153,384     Ps    188,021
                                                 ===========     =============

                                      F-21
<PAGE>

b) Expenses payable at December 31, 2003 and 2004, include expense provisions
analysed as follows:

<TABLE>
<CAPTION>
                                         BALANCES AT       INCREASES                          BALANCES AT
                                         DECEMBER 31,      DURING THE                         DECEMBER 31,
                                            2003             YEAR             PAYMENTS           2004
                                        -------------   ---------------   ---------------   ---------------
<S>                                     <C>             <C>               <C>               <C>
Office expenses (light and power,
 water, telephone)                      Ps    101,433   Ps      350,621   Ps      350,819   Ps      101,235
Fees                                            1,784               211             1,231               764
                                        -------------   ---------------   ---------------   ---------------
                                        Ps    103,217   Ps      350,832   Ps      352,050   Ps      101,999
                                        =============   ===============   ===============   ===============
</TABLE>

<TABLE>
<CAPTION>
                                         BALANCES AT       INCREASES                          BALANCES AT
                                         DECEMBER 31,      DURING THE                         DECEMBER 31,
                                            2002             YEAR             PAYMENTS            2003
                                        -------------   ---------------   ---------------   ---------------
<S>                                     <C>             <C>               <C>               <C>
Office expenses (light and power,
 water, telephone)                      Ps     82,629   Ps      480,561   Ps      461,757   Ps      101,433
Fees                                                -            29,212            27,428             1,784
                                        -------------   ---------------   ---------------   ---------------
                                        Ps     82,629   Ps      509,773   Ps      489,185   Ps      103,217
                                        =============   ===============   ===============   ===============
</TABLE>

10.  LABOR OBLIGATIONS

The analysis of the net period cost, the funded status and the assumptions
considered in the pension plan and the seniority premium obligation at December
31, 2003 and 2004 is as follows:

<TABLE>
<CAPTION>
                                                           PENSION PLAN
                                        --------------------------------------------------
                                             2002              2003              2004
                                        --------------    --------------    --------------
<S>                                     <C>               <C>               <C>
NET PERIOD COST:
Labor cost                              Ps       3,581    Ps       3,585    Ps       8,805
Return on plan assets                             (964)           (1,278)           (5,167)
Amortization of past service costs                 556               447             2,309
Interest cost                                    1,330             1,413             6,396
                                        --------------    --------------    --------------
Net period cost                         Ps       4,503    Ps       4,167    Ps      12,343
                                        ==============    ==============    ==============
LABOR OBLIGATIONS:
Accumulated benefit obligation                            Ps      22,690    Ps     116,958
                                                          --------------    --------------
</TABLE>

                                      F-22
<PAGE>

<TABLE>
<S>                                                    <C>                <C>
Projected benefit obligation                           Ps       26,234    Ps      130,860
Plan assets                                                    (22,387)           (96,085)
Unrecognized prior service cost                                 (4,044)           (24,200)
Actuarial gains                                                 13,674             20,427
Unrecognized changes or improvements                            (9,289)           (18,595)
                                                       ---------------    ---------------
Net projected benefit obligation                                 4,188             12,407
                                                       ---------------    ---------------
Unfunded accumulated benefit obligation                Ps          734    Ps       22,760
                                                       ---------------    ---------------
Unfunded  accumulated  benefit  obligation less than
net projected seniority premium in some subsidiaries
                                                       Ps        3,527    Ps        3,161
Additional liability                                   Ps           74    Ps       13,512
                                                       ---------------    ---------------
Intangible assets                                      Ps           74    Ps       13,512
                                                       ---------------    ---------------
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year                Ps       26,033    Ps       26,234
Incorporation of the subsidiary Secba                              -              100,547
                                                       ---------------    ---------------
                                                                26,033            126,781
Service cost                                                     3,585              8,805
Interest cost                                                    1,413              6,396
Actuarial differences                                           (4,128)            (7,019)
Benefits paid                                                     (669)            (4,103)
                                                       ---------------    ---------------
Projected benefit obligation at end of year            Ps       26,234    Ps      130,860
                                                       ===============    ===============
CHANGES IN PLAN ASSETS:
Fair value of plan assets at beginning
  of the year                                          Ps       16,220    Ps       22,387
Incorporation of the subsidiary Secba                              -               67,960
                                                       ---------------    ---------------
                                                                16,220             90,347
Actual return on plan assets                                     1,278              5,167
Employer contribution                                            3,700             13,342
Actuarial differences                                            1,858             (8,668)
Benefits paid                                                     (669)            (4,103)
                                                       ---------------    ---------------
Fair value of plan assets at end of year               Ps       22,387    Ps       96,085
                                                       ===============    ===============
</TABLE>

<TABLE>
<CAPTION>
                                                       SENIORITY PREMIUM
                                      ---------------------------------------------------
                                           2002             2003               2004
                                      --------------   ---------------    ---------------
<S>                                   <C>              <C>                <C>
NET PERIOD COST:
Labor cost                            Ps       2,465   Ps        2,508    Ps        2,932
Amortization of past service costs             1,694             2,119              2,767
Interest cost                                  1,419             1,494              1,739
                                      --------------   ---------------    ---------------
Net period cost                       Ps       5,578   Ps        6,121    Ps        7,438
                                      ==============   ===============    ===============

LABOR OBLIGATIONS:
Accumulated benefit obligation                         Ps       27,912    Ps       28,453
                                                       ---------------    ---------------
</TABLE>

                                      F-23
<PAGE>

<TABLE>
<S>                                                    <C>                <C>
Projected benefit obligation                           Ps       32,154    Ps       36,238
Unrecognized prior service cost                                 (7,024)            (7,372)
Actuarial losses                                                (5,920)            (8,292)
Unrecognized improvements to the plan                           (6,140)            (4,495)
                                                       ---------------    ---------------
Net projected seniority premium                                 13,070    Ps       16,079
                                                       ---------------    ---------------

Unfunded accumulated benefit obligation                Ps       27,912    Ps       28,453
                                                       ---------------    ---------------

Additional liability                                   Ps       14,842    Ps       12,374
Intangible assets                                      Ps       12,934    Ps       11,362
                                                       ---------------    ---------------
Minimum seniority premium liability
  Adjustment                                           Ps       (1,908)   Ps       (1,012)
                                                       ===============    ===============
Change in benefit obligation:
Benefit obligation at beginning of year                Ps       28,984    Ps       32,154
Incorporation of the subsidiary Secba                                -              3,139
                                                       ---------------    ---------------
                                                                28,984             35,293
Service cost                                                     2,508              2,932
Interest cost                                                    1,494              1,739
Actuarial differences                                            2,689              1,650
Benefits paid                                                   (3,521)            (5,376)
                                                       ---------------    ---------------
Projected benefit obligation at end of year            Ps       32,154    Ps       36,238
                                                       ===============    ===============
</TABLE>

The Company used December 31, 2002, 2003 and 2004 measurement date for pension
plan and seniority premium.

The prior service cost, the past service costs and actuarial differences
assumptions will be amortized over a period ranging from 21 to 25 years (the
average remaining working life of employees).

The asset allocation for the Company's pension plan at the end of 2002, 2003 and
2004 and the target allocation for 2005 by asset category are as follows:

<TABLE>
<CAPTION>
                                                                                                 TARGET
                                                 PERCENTAGE OF PLAN AT YEAR END                ALLOCATION
                                      ---------------------------------------------------    --------------
                                           2002             2003               2004               2005
                                      --------------   ---------------    ---------------    --------------
<S>                                         <C>              <C>                <C>                <C>
Fixed-income securities                     85%              76%                79%                80%
Fixed-variable income securities            15%              24%                21%                20%
</TABLE>

Target asset allocations reflect its investment strategy of maximizing the rate
of return on plan assets and the resulting funded status, within an appropriate
level of risk.

The rates considered in the actuarial study were in 2002, 2003 and 2004 as
follows:

<TABLE>
<CAPTION>
                                           2002             2003               2004
                                      --------------   ---------------    ---------------
<S>                                         <C>              <C>                <C>
Labor obligations discount                  5.50%            5.25%              5.50%
Future salary increases                     2.50%            1.50%              1.50%
Return on assets                            6.50%            6.00%              6.50%
</TABLE>

                                      F-24
<PAGE>

Information about the expected cash flow for the pension benefit plant and
seniority premium follows:

                                                          SENIORITY
                                       PENSION PLAN        PREMINUM
                                      --------------   ---------------
Expected benefit payment:
         2005                         Ps       4,010   Ps        4,333
         2006                                  4,660             4,678
         2007                                  5,495             4,842
         2008                                  6,143             4,870
         2009                                  7,013             4,908
         2010-2014                            48,529            24,934
                                      --------------   ---------------
         Total                        Ps      75,850   Ps       48,565
                                      ==============   ===============

The above table reflects the total benefits expected to be paid from the plan.

11.  CONTINGENCIES AND COMMITMENTS

a) Bachoco has entered into operating leases for certain offices, production
sites, automotive and computer equipment. Most leases contain renewal options.
Rental expense was as follows:

                                        YEARS ENDED
                                        DECEMBER 31
                                      --------------
                  2002                Ps      33,451
                  2003                        24,168
                  2004                        28,564

b) Future minimum annual rental payments under existing operating leases with
initial terms in excess of one year as of December 31, 2004, are as follow:

                                        YEARS ENDED
                                        DECEMBER 31
                                      --------------
             2005                     Ps      28,564
             2006                             21,911
             2007                             14,796
             2008                             12,821
             2009                             12,821
             2010 and thereafter               8,009
                                      --------------
             Total                    Ps      98,922
                                      ==============

12.  STOCKHOLDERS' EQUITY

a) In April 1997, Bachoco had a stock split and created so-called "BL" units,
which consist of one series "B" share and one series "L" share, and so-called
"BB" units, which consist of two series "B" shares. Series "L" shares have
limited voting rights.

                                      F-25
<PAGE>

b) In 2002, 2003 and 2004, the Company declared and paid cash dividends at
nominal values of Ps 267,834, Ps 297,738 and Ps 238,925, respectively (Ps
303,782, Ps 320,877 and Ps 247,073, in constant Mexican pesos) or Ps .90, Ps .99
and Ps .80, respectively, per unit in nominal pesos.

c) The Mexican Corporation Act requires that at least 5% of each year's net
income be appropriated to increase the legal reserve until such reserve is equal
to 20% of capital stock issued and outstanding. The balance of the legal reserve
at December 31, 2003 and 2004, included in retained earnings, was Ps 184,412.

d) The Company approved a stock repurchase plan in 1998, in conformity with the
Mexican Securities Trading Act, providing a stock repurchase reserve for that
purpose of Ps 180,000 (Ps 272,368 expressed in constant Mexican pesos) through
the appropriation of retained earnings in 1998. During 2002, 2003 and 2004, the
Company repurchased 2,534 thousand, 300 thousand and 1,110 thousand units for Ps
41,940, Ps 5,767 and Ps 24,124, respectively. In 2002, 2003 and 2004, the
Company sold 1,846 thousand, 2,834 thousand and 710 thousand of units,
respectively, previously repurchased; the sales value of latter was for Ps
30,732 Ps 53,005 and Ps 12,889 respectively.

e) The Company is required to pay taxes on dividends distributed to stockholders
only to the extent the payment made exceeds the balance of the net tax profit
account (CUFIN), which is used to control earnings on which income tax has
already been paid.

Income tax paid on dividends refers to a tax payable by corporate entities and
not by individuals.

The Company obtains the majority of its revenues and net profit from BSACV. For
the years 2002 through 2004, pretax income of BSACV, represented between 87% and
92% of Bachoco's consolidated pretax income.

Dividends on which BSACV has paid income tax will be credited to the Company's
"CUFIN" account and, accordingly, no further income tax will be paid when such
amounts are distributed as dividends to the Company's stockholders.

f) The corporate income tax rate for the year was 34% in 2003 (35% in 2002 and
2001). However, from 1999 through 2001, corporate taxpayers had the option of
deferring a portion so that the tax payable represented 30% of taxable income.
The earnings on which there was a deferral of taxes had to be controlled in a
so-called "net reinvested tax profit account" ("CUFINRE"). This was basically to
clearly identify the earnings on which the taxpayer had opted to defer payment
of corporate income tax.

Since the Company opted for this tax deferral, earnings will be considered to be
distributed first from the "CUFINRE" account and any excess will be paid from
the "net tax profit account" ("CUFIN") so as to pay the 5% deferred tax.
Effective January 1, 2002, the above-mentioned option of deferring a portion of
income tax was eliminated.

                                      F-26
<PAGE>

13.  INCOME TAX, ASSET TAX AND EMPLOYEE PROFIT SHARING

a) The Company and each of its subsidiaries file separate income tax returns.
BSACV, the Company's principal operating subsidiary, is subject to payment of
corporate income tax under the provisions of the simplified regime, which is
applicable to companies engaged exclusively in agriculture, cattle-raising,
fishing, forestry and certain other activities the income tax law establishes
that are exclusive when the companies obtain no more than 10% of their revenues
from the production of processed products, with which rule BSACV has complied.

Effective January 1, 2002, the Mexican Congress passed a new Income Tax Law that
substantially modified the procedure for determining taxable income of those
entities that pay taxes under the previous simplified regime. As of that date,
taxable income in the simplified regimen is determined based on income
collected, less deductions paid.

The corporate tax rates for 2002, 2003, and 2004 were 35%, 34% and 33%
respectively. However, Companies engaged exclusively in agriculture,
cattle-raising, fishing, forestry and certain other activities, have a 50%
reduction in the tax payable.

In December 2004, a reduction in the 33% income tax rate was approved, so that
the rate will be 30% in 2005, 29% in 2006 and 28% in 2007 and succeeding years.
The effect of this tax rate reduction represented a credit to results of
operations of $ 10,092 in 2004. As of January 1, 2005, the tax rate for
taxpayers that pay income tax under the simplified regime will be determined by
applying the reduction of 46.67% in 2005, 44.83% in 2006 and 42.86% in 2007 to
the regular income tax rates of 30%, 29% and 28% for each of the respective
years, resulting in a fixed rate of 16%.

In addition to the decrease in income tax rate, the tax reforms passed in
December 2004 include the elimination, as of 2005, of the taxable deduction of
purchases so as to permit only the deduction of cost sales. Such change is not
applicable to BSACV, since the Company pays income tax under the simplified
regime.

Taxpayers that were under the simplified regimen in force through 2001, must
determine the total amount of earnings of prior years on which taxes need to be
paid or the available tax loss carryforward at the date on which it was enacted.
As a result of this requirement, the Company determined a tax loss carryforward
in the amount of Ps 3,247,167, as of January 1, 2002. At December 31 2004, the
Company had a Ps 217,450 tax loss carryforward.

b) In addition to income tax, the Company and its subsidiaries are also subject
to an alternative minimum tax known as the asset tax, which is assessed on the
average value of most assets, net of certain liabilities. The general asset tax
rate is 1.8%. This Asset Tax Law permits companies that have the right to reduce
their income tax to reduce the asset tax in the same proportion; therefore,
BSACV is subject to a 0.9% rate and to special rules excluding many assets from
the determination of asset tax and a tax incentive derived from the investment
in assets. The asset tax in 2002, 2003 and 2004 amounted to Ps 14,176, Ps 13,498
and Ps 12,747, respectively. In each of the three years the Company credited
against these amounts the income tax paid in such years of Ps 10,625, Ps 11,842
and Ps 10,689 respectively.

The Company and its subsidiaries are required to pay asset tax if the amount of
asset tax exceeds the computed income tax liability. Asset tax paid can be
credited against income tax in subsequent years (up to ten years). At December
31, 2004, the Company had, at nominal value, Ps 7,651 in asset tax credits.

                                      F-27
<PAGE>

c) For the years ended December 31, 2002, 2003 and 2004, income tax charged
(credited) to results of operations was as follows:

                                 2002              2003            2004
                            --------------   --------------   --------------
Current year income tax     Ps      50,946   Ps      40,360   Ps      20,048
Current year asset tax               3,550            1,655            2,058
Deferred income tax               (257,045)          69,397           81,350
                            --------------   --------------   --------------
Total income tax            Ps    (202,549)  Ps     111,412   Ps     103,456
                            ==============   ==============   ==============

As explained above, the Company's main subsidiary pays taxes under the
simplified regime. Effective January 1, 2002, the related income tax is payable
on the basis of revenues collected net of deductible expenses paid, as well as
on dividends paid, to the extent they exceed the net tax profit account (see
Note 12 e).

The component of the Company's the deferred income tax (assets) and liabilities
are as follows:

                                                  2003             2004
                                             --------------   --------------
Assets:
Accounts payable                             Ps    (103,506)  Ps     (78,180)
Recoverable asset tax                                (5,382)         (70,347)
Tax loss carry forward for
simplified regimen in
force through December 31, 2001                    (173,841)         (34,792)
                                             --------------   --------------
                                                   (282,729)        (183,319)
                                             --------------   --------------

Liabilities:
Inventories                                         383,080          276,198
Accounts receivable                                  67,461           70,676
Fixed assets                                      1,277,938        1,143,130
Additional liability from
 stockholders equity                                227,773          374,546
                                             --------------   --------------
                                                  1,956,252        1,864,550
                                             --------------   --------------
Total deferred income tax liability, net     Ps   1,673,523   Ps   1,681,231
                                             ==============   ==============

As of December 31, 2003 and 2004, the deferred tax liability was determined
based on the difference between the book and the tax value of stockholders'
equity and is greater than that determined using the asset and liability method.
Consequently, the Company recognized an additional liability in the amount of Ps
374,546, (Ps 227,773 in 2003), so as to recognize the greater of the amount of
the deferred tax determined by the asset and liability method, and the amount
determined by considering the capital earned, as the only temporary item.

The most significant items that gave rise to a difference between the total
amount of current year income tax and the current year deferred tax determined
at the statutory rate are as follows:

                                                 2002     2003     2004
                                                ------   ------   ------
                                                   %        %        %
Statutory income tax rate                        17.50    17.00    16.50
Effect of companies outside simplified regime     1.48     1.27     3.19
Effect of non-taxable book items                 (4.63)       -    (5.72)
Benefit derived from change in law effective
 in 2002 and changes in tax rate                (28.63)       -    (1.24)
                                                ------   ------   ------
Effective income tax rate                       (14.28)   18.27    12.73
                                                ======   ======   ======

                                      F-28
<PAGE>

d) At December 31, 2003 and 2004, the tax value of the Company's equity, which
will not be subject to taxation, is comprised of the following:

                                                        2003            2004
                                                   -------------   -------------
Restated contributed capital (CUCA)                Ps  1,682,866   Ps  1,682,866
Net tax profit (CUFIN) and net reinvested
tax profit (CUFINRE)                                     155,589         315,239
                                                   -------------   -------------
Total                                              Ps  1,838,455   Ps  1,998,105
                                                   =============   =============

e) The Company and BSACV have no employees, but each of the subsidiaries of the
Company that had employees is required under Mexican law to pay employees, in
addition to their compensation and benefits, profit sharing in an aggregate
amount equal to 10% of such subsidiary's taxable income subject to certain
adjustments.

14.  SEGMENTS

During 2002, 2003 and 2004, there were no intersegment transactions required to
be eliminated. The information included in the column "Others" is basically
related to swine and feed. The disclosures required are as follows:

<TABLE>
<CAPTION>
                                              As of and for the year ended December 31, 2002
                                              -----------------------------------------------
                                                 Poultry           Others           Total
                                              -------------    -------------    -------------
<S>                                           <C>              <C>              <C>
Net revenues                                  Ps 10,231,591    Ps  1,097,179    Ps 11,328,770
Cost of sales                                     7,459,374          944,312        8,403,686
Gross profit                                      2,772,217          152,867        2,925,084
Interest income                                     112,066            6,086          118,152
Interest expense                                    (32,547)          (1,774)         (34,321)
Loss on net monetary position                      (112,837)            (664)        (113,501)
Income tax and asset tax                            247,137          (44,588)         202,549
Majority net income                               1,532,590           84,510        1,617,100
Property, plant and equipment, net                7,482,215          318,339        7,800,554
Total assets                                     12,095,853          552,651       12,648,504
Total liabilities                                 2,210,657           75,754        2,286,411
Capital expenditures                                288,692                -          288,692
Expenses not requiring cash disbursement:
  Depreciation                                      334,676           12,043          346,719
  Amortization of good will                          17,503                -           17,503
</TABLE>

                                      F-29
<PAGE>

<TABLE>
<CAPTION>
                                               As of and for the year ended December 31, 2003
                                              -----------------------------------------------
                                                 Poultry           Others           Total
                                              -------------    -------------    -------------
<S>                                           <C>              <C>              <C>
Net revenues                                  Ps 10,041,516    Ps  1,267,781    Ps 11,309,297
Cost of sales                                     8,052,468        1,147,565        9,200,033
Gross profit                                      1,989,048          120,216        2,109,264
Interest income                                     213,635          (50,813)         162,822
Interest expense                                    (22,210)          (3,811)         (26,021)
Loss on net monetary position                       (76,585)          (1,228)         (77,813)
Income tax and asset tax                            (89,809)         (21,603)        (111,412)
Majority net income                                 533,551           29,427          562,978
Property, plant and equipment, net                7,805,535          404,461        8,209,996
Total assets                                     12,540,283          508,421       13,048,704
Total liabilities                                 2,322,577          144,126        2,466,703
Capital expenditures                                794,828                -          794,828
Expenses not requiring cash
  disbursement:
  Depreciation                                      368,501           15,719          384,220
  Amortization of good will                          17,606                -           17,606
</TABLE>

<TABLE>
<CAPTION>
                                              AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2004
                                              -----------------------------------------------
                                                 POULTRY           OTHERS           TOTAL
                                              -------------    -------------    -------------
<S>                                           <C>              <C>              <C>
Net revenues                                  Ps 11,891,789    Ps  1,407,615    Ps 13,299,404
Cost of sales                                     9,483,599        1,302,112       10,785,711
Gross profit                                      2,408,190          105,503        2,513,693
Interest income                                     120,269          (18,427)         101,842
Interest expense                                   (117,819)          (3,689)        (121,508)
Loss on net monetary position                       (96,878)               -          (96,878)
Income tax and asset tax                            (75,319)         (28,137)        (103,456)
Majority net income                                 661,280           41,541          702,821
Property, plant and equipment, net                8,029,149          198,806        8,227,955
Total assets                                     12,939,762          497,143       13,436,905
Total liabilities                                 2,426,647          134,748        2,561,395
Capital expenditures                                438,234                -          438,234
Expenses not requiring cash
  disbursement:
  Depreciation                                      410,644            9,631          420,275
  Amortization of good will                          12,396            5,126           17,522
</TABLE>

<TABLE>
<CAPTION>
                                              As of and for the year ended December 31, 2002
                                              -----------------------------------------------
                                                 Chicken            Egg             Total
                                              -------------    -------------    -------------
<S>                                           <C>              <C>              <C>
Net revenues                                  Ps  9,163,353    Ps  1,068,238    Ps 10,231,591

<CAPTION>
                                               As of and for the year ended December 31, 2003
                                              -----------------------------------------------
                                                 Chicken            Egg             Total
                                              -------------    -------------    -------------
<S>                                           <C>              <C>              <C>
Net revenues                                  Ps  8,782,310    Ps  1,259,206    Ps 10,041,516

<CAPTION>
                                              AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2004
                                              -----------------------------------------------
                                                 CHICKEN            EGG             TOTAL
                                              -------------    -------------    -------------
<S>                                           <C>              <C>              <C>
Net revenues                                  Ps 10,445,428    Ps  1,446,361    Ps 11,891,789
</TABLE>

                                      F-30
<PAGE>

15. FOREIGN CURRENCY POSITION

a) A summary of the Company's assets and liabilities denominated in U.S. dollars
(the only foreign currency) as of December 31:

                                                     (Thousands U.S. dollars)
                                                  -----------------------------
                                                      2003            2004
                                                  -------------   -------------
ASSETS:
  Cash and cash equivalents                       $      64,091   $      75,643
  Advances to suppliers (included in inventories
   and property, plant and equipment)                    20,051          16,184
                                                  -------------   -------------
                                                         84,142          91,827
LIABILITIES:
  Notes payable to banks and long-term
   debt                                                    (422)            (36)
  Accounts payable                                      (12,532)         (7,839)
                                                  -------------   -------------
                                                        (12,954)         (7,875)
                                                  -------------   -------------
Net long position                                 $      71,188   $      83,952
                                                  =============   =============

b) As of December 31, 2003 and 2004, the exchange rate was Ps 11.230 and Ps
11.175 per dollar, respectively.

c) Assets from foreign origin included in the consolidated balance sheets as of
December 31, 2003 and 2004, were:

                                                    (Thousands of U.S. dollars)
                                                   -----------------------------
                                                       2003            2004
                                                   -------------   -------------
Inventories                                        $      19,401   $      16,064
Property, plant and equipment                            123,290         128,685

d) Imported raw materials, in thousands of U.S. dollars, were $ 137,233 in 2002,
$ 84,633 in 2003 and $ 115,245 in 2004. Interest expense, in thousands of U.S.
dollars from debt denominated in U.S. dollars was $ 363 in 2002, $ 93 in 2003
and $ 235 in 2004.

16. HURRICANE ISIDORE

In September of 2002, hurricane Isidore affected the company's complex located
in the peninsula of Yucatan, and approximately 60% of the chicken farms
operating in that region. The Company started the repair of their farms in this
area immediately and, according to its plan, this was finished during 2003.
Other facilities such as breeder farms, processing plant and balance feed plants
suffered no material damage.

The assets were duly covered under an insurance policy, so in 2002 the Company
credited Ps 21,842 to results of operations under the caption other income.
During 2003, Bachoco concluded the related procedures with the insurance company
and as a result of the final settlement, the Company recognized in 2003 an
additional credit to results of operations of Ps 21,113.

                                      F-31
<PAGE>

17. DIFFERENCES BETWEEN MEXICAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
    PRINCIPLES

This consolidated financial statement are prepared in accordance with "Mexican
GAAP", which differ in certain respects from United States generally accepted
accounting principles ("U.S. GAAP").

The accompanying reconciliation to U.S. GAAP does not include the reversal of
the adjustments to the financial statements for the effects of inflation
required under Bulletin B-10, as amended, because the application of Bulletin
B-10 represents a comprehensive measure of the effects of price level changes in
the Mexican economy and, as such, is considered a more meaningful presentation
than historical cost based financial reporting for both Mexican and U.S.
accounting principles.

The principal differences between Mexican GAAP and U.S. GAAP, as they relate to
the Company, are described below together with an explanation, where
appropriate, of the method used to determine the adjustments that affect
consolidated operating income, net income, stockholders' equity and changes in
financial position for each of the three years ended December 31, 2002, 2003 and
2004.

DEFERRED INCOME TAX AND EMPLOYEE PROFIT SHARING

The Company follows the requirements of Mexican accounting Bulletin D-4,
"Accounting for Income Tax, Asset Tax and Employee Profit Sharing", issued by
the Mexican Institute. Bulletin D-4 requires the recognition of deferred taxes
on all temporary differences in balance sheet accounts for financial and tax
reporting purposes, using the enacted income tax rate at the time the financial
statements are issued.

Bachoco has applied Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes", for all periods presented, which requires that
deferred income taxes be determined using the liability method for all temporary
differences between financial reporting amounts and the tax basis of assets and
liabilities, and that deferred taxes on such differences be measured at the
enacted income tax rates for the year in which such taxes are expected to be
payable or refundable.

In the Company's case the application of both rules did not generate a
reconciling difference in 2002, 2003 and 2004; therefore, there is no difference
between Mexican and US GAAP in those years.

In addition, as described in Note 13, under Mexican labor law, the Company is
required to pay employee profit sharing. As of December 31, 2002, 2003 and 2004,
the Company did not recognize deferred employee profit sharing, due to its
immateriality. Employee profit sharing expense has been included in operating
expenses for US GAAP presentation purposes.

The deferred tax adjustment included in net income and stockholders' equity
reconciliations, represent the effect of deferred taxes on other U.S. GAAP
adjustments reflected in the respective summaries.

                                      F-32
<PAGE>

CAPITALIZED FINANCING COST

Under Mexican GAAP, capitalization of comprehensive financing cost on assets
under construction or in the pre-operating stage is allowed but not required.
Bachoco has elected to capitalize such comprehensive financing cost. Under U.S.
GAAP, interest expense incurred during the construction period on qualifying
expenditures must be considered an additional cost to be capitalized. Under U.S.
GAAP when financing is in Mexican pesos, the monetary gain is included in this
computation; when financing is denominated in U.S. dollars, only the interest is
capitalized and exchange losses are not included. The amount of interest or net
financing cost capitalized for US GAAP purposes was determined by reference to
the Companies average cost of outstanding debt and to construction progress
during the years presented.

MINORITY INTEREST

Under Mexican GAAP, minority interest is presented as a component of
stockholders' equity, immediately after total majority stockholders' equity.
Under US GAAP, this concept is presented out of stockholders' equity. For US
GAAP purposes the Company reclassified minority interest from stockholders'
equity, decreasing its total stockholders' equity by Ps 43,505 and Ps 41,124 at
December 31, 2003 and 2004, respectively, and reclassified minority interest
from the income statement decreasing net income by Ps 2,184, Ps 4,481 and Ps
3,810 for the years ended December 31, 2002, 2003 and 2004, respectively.

EFFECT OF INFLATION ACCOUNTING ON U.S. GAAP ADJUSTMENTS

To determine the net effect on the consolidated financial statements of
recognizing U.S. GAAP adjustments, it is necessary to recognize the effects of
applying Mexican GAAP inflation accounting provisions (described in Note 2) to
the U.S. GAAP adjustments.

REPORTING COMPREHENSIVE INCOME

The Company has adopted for purposes of the U.S. GAAP reconciliation SFAS No.
130, "Reporting Comprehensive Income" SFAS 130 establishes rules for the
reporting and disclosure of comprehensive income and its components. SFAS 130
requires the minimum seniority premium liability adjustment, the deficit from
restatement of stockholders' equity, and deferred taxes on the difference
between indexed cost and replacement cost and on the minimum seniority premium
liability adjustment, to be included in other comprehensive income. The U.S.
GAAP statements of changes in stockholders' equity include the disclosure
requirements of SFAS 130.

Cumulative amounts of the deficit from restatement of stockholder's equity net
of tax and the minimum seniority premium liability adjustment included in other
comprehensive income decreased stockholders' equity at December 31, 2004 by Ps
4,322,355 and Ps 1,012 respectively.

DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments", information is provided about the fair value of certain financial
instruments for which it is practicable to estimate that value.

                                      F-33
<PAGE>

The carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable, notes payable and accrued liabilities approximate their fair values,
due to the short maturity of these instruments.

The fair value of long-term debt, based on quoted market prices for the same or
similar issues or on the current rates offered to the Company for debt of the
same remaining maturities, approximates their carrying amounts.

EFFECT OF STATEMENT 133

Bulletin C-2 ("Financial Instruments"), sets general rules for the assessment,
presentation, and disclosure of financial information that issuers of financial
instruments should follow. Among said rules are the conditions that have to be
met in order to be able to offset financial assets and liabilities. Likewise, it
is established that financial instruments should be assessed at their fair
value, with the exception of those that have been classified as held to
maturity. The latter should be valued at their cost of acquisition.

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
requires the Company to recognize all derivatives on the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value through
income. If the derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives are either offset against the change in
fair value of assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivate's change in fair value will be
immediately recognized in earnings.

In April 2003, the FASB issued Statement of Financial Accounting Standards No.
149 (SFAS 149), "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities." SFAS 149 amends SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities" to provide clarification on the financial
accounting and reporting for derivative instruments and hedging activities and
requires similar accounting treatment for contracts with comparable
characteristics. The adoption of SFAS 149, effective primarily for contracts
entered into or modified after June 30, 2003, and for hedging relationships
designated after June 30, 2003, had no impact on the financial statements.

All derivative instruments held by the Company at December 31, 2003 and 2004,
are considered of a speculative nature; therefore, there are no differences
between the Mexican and US GAAP accounting treatment for the Company's
derivative instruments.

BUSINESS COMBINATIONS

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" (Statement
141), and No. 142, "Goodwill and Other Intangible Assets". Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Statement 141 also includes guidance
on the initial recognition and measurement of goodwill and other intangible
assets arising from business combinations completed after June 30, 2001. SFAS
142 prohibits the amortization of goodwill and intangible assets with indefinite
useful lives. Statement 142 requires that these assets be reviewed for
impairment at least annually. Intangible assets with finite lives will continue
to be amortized over their estimated useful lives. Additionally, Statement 142
requires that goodwill included in the carrying value of equity method
investments no longer be amortized.

                                      F-34
<PAGE>

The Company adopted the provisions of SFAS 142 on January 1, 2002, and
consequently ceased amortizing goodwill. As of that date, the Company has
effected impairment tests, determining no impairment of goodwill.

Under Mexican GAAP, Goodwill is amortized using the straight-line method over a
twenty-year period. The 2002, 2003 and 2004 reconciliation shows the application
of the non amortization provisions applied to goodwill, resulting in adjustments
of Ps 17,503, Ps 17,606 and Ps 17,522, respectively.

IMPAIRMENT OF ASSETS

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and supersedes
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", and the accounting and reporting
provisions of APB Opinion No. 30, Reporting the Results of Operations for a
disposal of a segment of a business. SFAS 144 is effective for fiscal years that
begun after December 15, 2001. The Company adopted the requirements of Statement
144 on January 1, 2002 and has not recorded any adjustments to the carrying
value of its long lived assets.

AGRICULTURE

Effective January 1, 2003, the Company adopted the requirements of the Mexican
accounting Bulletin E-1, Agriculture, which establishes the rules for
recognizing, valuing, presenting and disclosing biological assets and
agricultural products; it also establishes the treatment to be given to
government subsidies on biological assets.

This bulletin establishes that biological assets and the agricultural products
(the latter at the time of their harvesting) are to be valued at their fair
value, net of estimated costs at point of sale. Also, the Bulletin establishes
that whenever the fair value cannot be determined in a reliable, verifiable and
objective manner, the assets are to be valued at their production cost, net of
accumulated impairment, if any.

For US GAAP purposes, biological asset and agricultural products are valued at
cost. Therefore, the 2003 and 2004 reconciliation shows the reversal of
biological assets valuation at fair value resulting in a net charge (credit) of
Ps 61,984 and (Ps 21,154) respectively, leaving inventories of biological assets
and agricultural products stated at average cost of production, which
approximates estimated replacement cost and not in excess of net realizable
value.

                                      F-35
<PAGE>

EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS

SFAS 132 (revised 2003) requires new annual disclosures about the types of plan
assets, investment strategy, measurement date, plan obligations and cash flows
related to a Company's pensions and other postretirement benefits. It also
requires disclosure of the components of net periodic benefit cost recognized in
interim periods and, if significantly different from previously disclosed
amounts, the projected contributions to fund pension and other postretirement
benefit plans. The Company adopted the disclosure requirements of SFAS 132
(revised 2003) in December 2003 and has included them in Note10 of the
accompanying Mexican GAAP financial Statements.

CONSOLIDATION OF VARIABLE INTEREST ENTITIES

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities," an interpretation of Accounting Research Bulleting No. 51,
"Consolidated Financial Statements" and in December 2003, issued a revised
interpretation (FIN No. 46-R). FIN No. 46, as revised, requires certain variable
interest entities to be consolidated by the primary beneficiary of the entity if
the equity investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. The Company has no investments in variable
participation entities in which the Company is the primary beneficiary.

RECENT ACCOUNTING PRONOUNCEMENTS IN THE US

In November 2004, the FASB issued SFAS No. 151, Inventory Costs--an Amendment of
ARB No. 43, Chapter 4, which is the result of the FASB's efforts to converge
U.S. accounting standards for inventory with International Accounting Standards.
SFAS No. 151 requires abnormal amounts of idle facility expense, freight,
handling costs, and waste material to be recognized as current-period charges.
It also requires that allocation of fixed production overheads to the costs of
conversion be based on the normal capacity of the production facilities. SFAS
No. 151 is effective for inventory costs incurred during fiscal years beginning
after June 15, 2005. The Company does not expect the adoption of SFAS No. 151 to
have a material impact on its results of operations.

Other pronouncements issued by the FASB or other authoritative accounting
standards groups with future effective dates are either not applicable or not
significant to the Company's financial statements.

CASH FLOW INFORMATION

Under Mexican GAAP, the Company presents consolidated statements of changes in
financial position, as described in Note 2.

In accordance with Mexican GAAP, the change in current and long-term debt due to
restatements in constant Mexican pesos, including the effect of exchange
differences, is presented in the statements of changes in financial position in
the financing activities section.

                                      F-36
<PAGE>

The gain from monetary position and the exchange gain or loss are not presented
in the operating activities section as a reconciling adjustments, as they are
included in the respective monetary asset or liability line. Statement of
Financial Accounting Standards No. 95 ("SFAS 95"), "Statement of Cash Flows",
does not provide guidance with respect to price-level restated financial
statements.

The Company has adopted, for its US GAAP presentation of cash flow information,
the guidance issued by the AICPA SEC Regulations Committee's International
Practices Task Force in its meeting held on November 24, 1998, requiring foreign
registrants that file price level adjusted financial statements to provide cash
flow statements that show separately the effects of inflation on cash flows.

CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31,
                                                --------------------------------------------------
                                                     2002              2003              2004
                                                --------------    --------------    --------------
<S>                                             <C>               <C>               <C>
OPERATING ACTIVITIES:
Net income                                      Ps   1,638,174    Ps     529,178    Ps     740,302
Adjustments to reconcile net income to
 net cash provided by operating
 activities:
Depreciation                                           348,266           385,908           422,423
Deferred income tax                                   (258,533)           66,209            87,991
                                                --------------    --------------    --------------
                                                     1,727,907           981,295         1,250,716
Changes in assets and liabilities:
Accounts receivable                                      9,245           (80,834)           63,049
Inventories and biological assets                     (375,071)         (444,898)         (301,872)
Prepaid expenses and other accounts
Receivable                                            (119,255)           88,806            25,413
Accounts payable                                      (157,567)          157,300            38,769
Related parties                                          5,043           (18,976)            3,708
Other taxes payable and other accruals                (107,918)           34,320            40,703
Labor obligations, net                                  (7,390)           (4,274)          (11,574)
Loss (gain) on net monetary position                   113,587            77,939            97,244
                                                --------------    --------------    --------------
Cash flows provided by operating activities          1,088,581           790,678         1,206,156

FINANCING ACTIVITIES:
Proceeds from issuance of notes payable
 to banks                                               63,061           140,655           198,951
Repayment of long-term debt and notes
 Payable                                              (205,930)         (190,818)         (185,517)
Cash dividends paid                                   (303,782)         (320,877)         (247,073)
Repurchase (sale) of stock                             (11,028)           47,238           (11,235)
                                                --------------    --------------    --------------
Cash flows used in financing activities               (457,859)         (323,802)         (244,874)

INVESTING ACTIVITIES:
Acquisition of property, plant and
 Equipment                                            (292,410)         (804,033)         (446,610)
Other assets                                             6,169             3,968             2,909
                                                --------------    --------------    --------------
Cash flows used in investing activities               (286,241)         (800,065)         (443,701)
                                                --------------    --------------    --------------
</TABLE>

                                      F-37
<PAGE>

<TABLE>
<CAPTION>
                                                     2002              2003              2004
                                                --------------    --------------    --------------
<S>                                             <C>               <C>               <C>
Effect of inflation accounting                         158,247           128,876           169,862

Net increase (decrease) in cash
 and cash equivalents                                  502,728          (204,313)          687,443
Cash and cash equivalents at
 beginning of year                                   1,352,244         1,854,972         1,650,659
                                                --------------    --------------    --------------
Cash and cash equivalents at
 end of year                                    Ps   1,854,972    Ps   1,650,659    Ps   2,338,102
                                                ==============    ==============    ==============

Interest paid                                   Ps      13,018    Ps       8,099    Ps       8,400
Income tax paid                                         63,942            40,360            90,394
Asset tax paid                                           1,901             1,657             2,058
</TABLE>

SUMMARY OF ADJUSTMENTS TO RECONCILE MEXICAN GAAP AND U.S. GAAP

The following is a summary of net income adjusted to take into account certain
material differences between Mexican GAAP and U.S. GAAP.

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                --------------------------------------------------
                                                     2002              2003              2004
                                                --------------    --------------    --------------
<S>                                             <C>               <C>               <C>
Net income as reported under Mexican GAAP       Ps   1,619,284    Ps     567,459    Ps     706,631
Adjustments to reconcile net income to
 U.S. GAAP:
Interest cost capitalized                                3,717             9,205             8,376
Depreciation of capitalized interest                    (1,547)           (1,688)           (2,148)
Deferred income tax on US GAAP
 Adjustments                                             1,487             3,187            (7,057)
Amortization of goodwill                                17,503            17,606            17,522
Effect of inflation accounting on
 U.S. GAAP adjustments                                     (86)             (126)             (366)
Biological assets and agricultural
  products valuation at fair value                           -           (61,984)           21,154
Minority interest                                       (2,184)           (4,481)           (3,810)
                                                --------------    --------------    --------------
Net income under U.S. GAAP                      Ps   1,638,174    Ps     529,178    Ps     740,302
                                                ==============    ==============    ==============
Weighted average number of units
 outstanding (thousands)                               297,898           299,369           299,930
Net income per unit                             Ps        5.49    Ps        1.77    Ps        2.47
</TABLE>

After the foregoing adjustment for the depreciation of capitalized interest, the
reclassification of employee profit sharing, the non amortization of goodwill
and biological assets and agricultural products valuation at fair value
operating income under U.S. GAAP would be Ps 1,372,808, Ps 491,268 and
Ps 887,242 in 2002, 2003 and 2004, respectively.

                                      F-38
<PAGE>

Total assets under U.S. GAAP were Ps 13,066,041 at December, 31 2003 and
Ps 13,499,146 at December 31, 2004 The difference in total assets between
Mexican GAAP and U.S. GAAP is comprised of the foreign exchange loss and the
monetary gain on financing in U.S. dollars capitalized in assets under
construction net of accumulated depreciation, biological assets and agricultural
products valuation at fair value and the amortization of goodwill.

The reconciliation of the stockholders' equity between Mexican GAAP and US GAAP
is as follows:

                                                     YEARS ENDED DECEMBER 31,
                                                   ----------------------------
                                                       2003           2004
                                                   -------------  -------------
Majority stockholders' equity as reported under
Mexican GAAP                                       Ps 10,538,496  Ps 10,834,386

Adjustments to reconcile majority stockholders'
 equity to U.S. GAAP:
Accumulated differences between the financing
 cost capitalized for Mexican GAAP and U.S. GAAP
 purposes                                                 51,332         59,708
Accumulated depreciation on the above items               (7,120)        (9,268)
Deferred income taxes on U.S. GAAP adjustments            (2,901)       (10,324)
Accumulated amortization of goodwill                      35,109         52,631
Biological  assets and  agricultural  products
valuation at fair value                                  (61,984)       (40,830)
                                                   -------------  -------------
Majority stockholders' equity as reported under
 U.S. GAAP                                         Ps 10,552,932  Ps 10,886,303
                                                   =============  =============

The effects of the above adjustments do not have any impact on minority
interest.

                                      F-39
<PAGE>

The consolidated statements of changes in stockholders' equity in accordance
with U.S. GAAP is as follows:

<TABLE>
<CAPTION>
                                                                                               STOCK
                                                                                             REPURCHASE         RETAINED
                                                        CAPITAL STOCK    PAID IN CAPITAL      RESERVE           EARNINGS
                                                        -------------    ---------------   --------------    --------------
<S>                                                     <C>              <C>               <C>               <C>
Balance at December 31, 2001                            Ps  2,056,105    Ps      554,455   Ps     222,507    Ps  10,315,886
Repurchase of stock                                            (1,409)                            (40,144)             (387)
Sales of repurchased stock                                      1,026             29,706                -                 -
Cash dividends paid                                                 -                  -                -          (303,782)
Comprehensive income
  Net income for the year                                           -                  -                -         1,638,174
  Components of other comprehensive income:                         -                  -                -                 -
  Deficit from holding of non monetary assets                       -                  -                -                 -
Minimum seniority premium liability adjustment                      -                  -                -                 -
Other comprehensive income, net of taxes                            -                  -                -                 -
Comprehensive income                                                -                  -                -                 -
                                                        -------------    ---------------   --------------    --------------
Balance at December 31, 2002                                2,055,722            584,161          182,363        11,649,891
Repurchase of stock                                              (158)                 -           (5,609)
Sales of repurchased stock                                      1,519             51,486                -                 -
Cash dividends paid                                                 -                  -                -          (320,877)
Comprehensive income                                                -                  -                -                 -
  Net income for the year                                           -                  -                -           529,178
  Components of other comprehensive income:                         -                  -                -                 -
    Deficit from holding of non monetary assets                     -                  -                -                 -
Minimum seniority premium liability adjustment                      -                  -                -                 -
Other comprehensive income, net of taxes                            -                  -                -                 -
Comprehensive income                                                -                  -                -                 -
                                                        -------------    ---------------   --------------    --------------
Balance at December 31, 2003                                2,057,083            635,647          176,754        11,858,192
Repurchase of stock                                              (573)                 -          (23,551)                -
Sales of repurchased stock                                        367             12,522                -                 -
Cash dividends paid                                                 -                  -                -          (247,073)
Comprehensive income                                                -                  -                -                 -
  Net income for the year                                           -                  -                -           740,302
  Components of other comprehensive income:                         -                  -                -                 -
   Deficit from holding of non monetary assets                      -                  -                -                 -
   Minimum seniority premium liability adjustment                   -                  -                -                 -
Other comprehensive income, net of taxes                            -                  -                -                 -

Comprehensive income                                                -                  -                -                 -

                                                                    -                  -                -                 -
                                                        -------------    ---------------   --------------    --------------
Balance at December 31, 2004                            Ps  2,056,877    Ps      648,169   Ps     153,203    Ps  12,351,421
                                                        =============    ===============   ==============    ==============

<CAPTION>
                                                           OTHER                                TOTAL
                                                        COMPREHENSIVE      COMPREHENSIVE     STOCKHOLDERS
                                                            INCOME            INCOME            EQUITY
                                                        --------------    --------------    --------------
<S>                                                     <C>               <C>               <C>
Balance at December 31, 2001                            Ps  (4,036,615)                -    Ps   9,112,338
Repurchase of stock                                                  -                 -           (41,940)
Sales of repurchased stock                                           -                 -            30,732
Cash dividends paid                                                  -                 -          (303,782)
Comprehensive income                                                                   -
  Net income for the year                                            -    $    1,638,174         1,638,174
  Components of other comprehensive income:                          -                 -
  Deficit from holding of non monetary assets                  (70,129)          (70,129)          (70,129)
Minimum seniority premium liability adjustment                     (22)              (22)              (22)
                                                                          --------------
Other comprehensive income, net of taxes                             -           (70,151)
Comprehensive income                                                 -    Ps   1,568,023
                                                        --------------    ==============    --------------
Balance at December 31, 2002                                (4,106,766)                -        10,365,371
Repurchase of stock                                                  -                 -            (5,767)
Sales of repurchased stock                                                             -            53,005
Cash dividends paid                                                  -                 -          (320,877)
Comprehensive income                                                 -                 -
  Net income for the year                                            -           529,178           529,178
  Components of other comprehensive income:                          -                 -
    Deficit from holding of non monetary assets                (66,817)          (66,817)          (66,817)
Minimum seniority premium liability adjustment                  (1,161)           (1,161)           (1,161)
                                                                          --------------
Other comprehensive income, net of taxes                             -           (67,978)
Comprehensive income                                                 -           461,200
                                                        --------------    ==============    --------------
Balance at December 31, 2003                                (4,174,744)                -        10,552,932
Repurchase of stock                                                  -                 -          (24,124)
Sales of repurchased stock                                           -                              12,889
Cash dividends paid                                                  -                 -          (247,073)
Comprehensive income                                                 -                 -
  Net income for the year                                            -           740,302           740,302
  Components of other comprehensive income:                          -                 -
   Deficit from holding of non monetary assets                (149,519)         (149,519)         (149,519)
   Minimum seniority premium liability adjustment                  896               896               896
                                                                          --------------
Other comprehensive income, net of taxes                             -          (148,623)
                                                                          --------------
Comprehensive income                                                 -    $      591,679
                                                                          ==============
                                                                     -
                                                        --------------                      --------------
Balance at December 31, 2004                            Ps  (4,323,367)                     Ps  10,886,303
                                                        ==============                      ==============
</TABLE>

                                      F-40