AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 28, 2006
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                                       OR

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

           FOR THE TRANSITION PERIOD FROM ____________ TO ___________

[ ]  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                        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:

                                                  NAME OF EACH EXCHANGE ON WHICH
               TITLE OF EACH CLASS                           REGISTERED
-----------------------------------------------   ------------------------------
American Depositary Shares, each representing         New York Stock Exchange
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 if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.

                                 Yes [ ] No [X]

         If this report is an annual or transition report, indicate by check
mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.

                                 Yes [X] No [ ]

<PAGE>

         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 whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange
Act. (Check one):

Large accelerated filer [ ]   Accelerated filer [X]   Non-accelerated filer [ ]

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

                             Item 17 [ ] Item 18 [X]

         If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

                                 Yes [ ] No [X]

================================================================================

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                           PAGE
                                                                                                           ----
<S>            <C>                                                                                           <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....................................................39
    ITEM 7.    MAJOR STOCKHOLDERS AND RELATED PARTY TRANSACTIONS.............................................46
    ITEM 8.    FINANCIAL INFORMATION.........................................................................48
    ITEM 9.    THE OFFER AND LISTING.........................................................................50
    ITEM 10.   ADDITIONAL INFORMATION........................................................................53
    ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................................69
    ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES........................................71

PART II

    ITEM 13.   DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES................................................71
    ITEM 14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS..................71
    ITEM 15.   CONTROLS AND PROCEDURES.......................................................................71
    ITEM 16.   [RESERVED]....................................................................................71
    ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT..............................................................71
    ITEM 16B.  CODE OF ETHICS................................................................................72
    ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES........................................................72
    ITEM 16D.  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES....................................72
    ITEM 16E.  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS........................72

PART III

    ITEM 17.   FINANCIAL STATEMENTS..........................................................................73
    ITEM 18.   FINANCIAL STATEMENTS..........................................................................73
    ITEM 19.   EXHIBITS......................................................................................73
</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
94.1% of consolidated total assets on December 31, 2005. 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, 2005.

         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.10.628 to U.S.$1.00, the
exchange rate on December 31, 2005.

         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, balanced feed (or "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:

         o    economic, weather and political conditions;

         o    raw material prices;

         o    competitive conditions; and

         o    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, 2004 and
2005 and for the years ended December 31, 2003, 2004 and 2005. 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 to:

         o    restate non-monetary assets at current replacement cost or by
              using the Mexican National Consumer Price Index ("NCPI"), except
              for the biological assets (see Note 4 of the Financial Statement);

         o    restate non-monetary liabilities using the NCPI;

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

         o    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, 2005. 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.

                                        1
<PAGE>

<TABLE>
<CAPTION>
                                                              AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                      -------------------------------------------------------------------------------------------
                                          2001           2002            2003            2004            2005           2005(2)
                                      ------------    ------------    ------------    ------------    ------------    -----------
                                                    (MILLIONS OF CONSTANT PESOS AS OF DECEMBER 31, 2005)(1)           (MILLIONS
                                                                                                                        OF U.S.
                                                                                                                      DOLLARS)(2)
<S>                                   <C>             <C>             <C>             <C>             <C>                 <C>
INCOME STATEMENT DATA
Mexican GAAP:

Net revenues ......................   Ps. 11,530.5    Ps. 11,706.4    Ps. 11,686.2    Ps. 13,742.6    Ps. 14,466.0        1,361.1
   Cost of sales ..................        8,440.1         8,683.8         9,506.6        11,145.2        10,405.8          979.1
                                      ------------    ------------    ------------    ------------    ------------    -----------
   Gross profit ...................        3,090.4         3,022.6         2,179.6         2,597.5         4,060.2          382.0
   Operating income ...............        1,542.1         1,403.7           469.8           882.2         2,202.7          207.2
   Comprehensive financing income
     (loss) .......................          132.0            16.2           136.0           (73.9)          (68.5)          (6.4)
   Majority Net income ............        1,291.0         1,673.3           586.4           730.1         1,767.7          166.3
   Majority Net income per Unit(3)            4.33            5.61            1.94            2.42            5.90           0.56
   Majority Net income per ADS(4)             25.9            33.7            11.7           14.51           35.40           3.33
   Dividends per Unit(5) ..........           1.29            1.05            1.11            0.85            0.81           0.08
   Weighted average Units
     outstanding (thousands) ......        297,454         297,898         299,369         299,630         299,847        299,847
U.S. GAAP:
Net revenues ......................   Ps. 11,530.5    Ps. 11,706.4    Ps. 11,709.6    Ps. 13,764.5    Ps. 14,440.0        1,358.7
   Cost of sales ..................        8,440.1         8,683.8         9,506.6        11,145.2        10,405.8          979.1
                                      ------------    ------------    ------------    ------------    ------------    -----------
   Gross profit ...................        3,090.4         3,022.5         2,203.0         2,619.4         4,034.2          379.6
   Operating income ...............        1,540.2         1,418.6           420.2           916.8         2,170.8          204.3
   Comprehensive financing income
     (loss) .......................          103.7            12.4           126.5           (65.6)          (57.1)          (5.4)
   Majority Net income ............   Ps.  1,307.2    Ps.  1,692.7    Ps.    546.8    Ps.    765.0    Ps.  1,753.7          165.0
   Majority Net income per Unit(3)             4.4            5.68            1.83             2.6             5.8            0.5
   Majority Net income per ADS(4)             26.3            34.1           10.95            15.3            35.0            3.3
   Dividends per Unit(5) ..........           1.29            1.05            1.11            0.85            0.81           0.08

STATEMENT OF FINANCIAL POSITION
DATA
Mexican GAAP:
   Cash and cash equivalents ......   Ps.  1,397.3    Ps.  1,916.8    Ps.  1,705.7    Ps.  2,416.0    Ps.  3,167.7          298.1
   Property, plant and equipment ..        8,120.5         8,060.6         8,483.6         8,502.2         8,815.0          829.4
   Total assets ...................       12,578.6        13,070.0        13,483.6        13,901.8        15,311.4        1,440.7
   Short-term debt(6) .............          177.5           133.0            63.1           103.0            92.7            8.7
   Long-term debt .................          186.0            80.9           101.0            74.9            51.9            4.9
   Stockholders' equity ...........        9,435.7        10,707.4        10,934.7        11,238.0        12,506.9        1,176.8
U.S. GAAP:
   Cash and cash equivalents ......   Ps.  1,397.3    Ps.  1,916.8    Ps.  1,705.7    Ps.  2,416.0    Ps.  3,167.7          298.1
   Property, plant and equipment ..        8,156.2         8,098.5         8,592.3         8,554.1         8,875.8          835.1
   Total assets ...................   Ps. 12,606.6    Ps. 13,125.9    Ps. 13,501.5    Ps. 13,966.1    Ps. 15,358.4        1,445.1
   Short-term debt(6) .............          177.5           133.0            63.1           103.0            92.7            8.7
   Long-term debt .................          186.0            82.9           101.0            74.9            51.9            4.9
   Stockholders' equity ...........        9,416.1        10,710.9        10,904.6        11,249.1        12,503.6        1,176.5

SELECTED OPERATING DATA
   Sales volume (thousands of
     tonnes):
     Chicken ......................          662.2           665.4           655.4           733.0           773.0
     Eggs .........................           85.6           131.7           132.1           138.1           140.6
     Swine ........................            9.0             9.0             8.5             9.1             9.6
     Balanced Feed ................          346.0           324.7           316.2           320.7           389.6
   Gross margin(%) ................           26.8%           25.8%           18.7%           18.9            28.1
   Operating margin(%) ............           13.4%           12.0%            4.0%            6.4            15.2
   Net margin(%) ..................           11.2%           14.3%            5.0%            5.3            12.2
   Total employees ................         18,482          18,306          18,495          18,896          20,432
</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.10.628 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, 2005) 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. It finished stronger compared with
respect to the end of 2003.

         During 2005, the Mexican peso continued showing volatility mainly at
the beginning and at the end of the year, with a general trend to appreciate
with respect to the U.S. dollar. At the end of 2005, the Mexican peso finished
stronger against the U.S. dollar.

         We cannot assure you that the Mexican government will maintain its
current strategies for 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):

                                               EXCHANGE RATE(1)
                                      (IN CURRENT PESOS PER U.S. DOLLAR)
                                 ---------------------------------------------
YEAR ENDED DECEMBER 31,            HIGH       LOW      AVERAGE(2)     YEAR END
------------------------------   --------   --------   ----------   ----------
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
2005 .........................      11.41      10.41        10.89        10.63

----------
(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.

                                        3
<PAGE>

                                   EXCHANGE RATE(1)
                                  (IN CURRENT PESOS
                                   PER U.S. DOLLAR)
                                 -------------------
PERIOD                             HIGH        LOW
------------------------------   --------   --------
December 2005 ................      10.77      10.41
January 2006 .................      10.64      10.44
February 2006 ................      10.53      10.43
March 2006 ...................      10.95      10.46
April 2006 ...................      11.16      10.86
May 2006 .....................      11.31      10.84

----------
(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.

         On June 27, 2006, the exchange rate for cable transfers in pesos as
certified for customs purposes by the Federal Reserve Bank of New York was
Ps. 11.418 per $1 US dollar.

RISK FACTORS

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

         Mexico has experienced adverse economic conditions

         o    In 2002, Mexico's gross domestic product, or GDP, increased by
              0.9% and the inflation rate was 5.7%.

         o    In 2003, GDP increased by 1.3% and the inflation rate was 3.98%.

         o    In 2004, Mexico's GDP increased by 4.4% and the inflation rate was
              5.19%.

         o    In 2005, Mexico's domestic product improved and increased by 3.0%,
              and the inflation rate was 3.33%, lower than expected.

         Should the Mexican economy fall 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 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.

                                        4
<PAGE>

         In 2005 the Mexican peso appreciated with respect to the U.S. dollar by
4.9% at the end of the year and also the average value of the Mexican peso was
3.6% higher. 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.

         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 3.33% in 2005, 5.19% in 2004, 3.98% in 2003,
and 5.7% in 2002.

         Inflation for the first four months of 2006 was 1.01% according to the
Mexican Central Bank. According to Banamex, the average interest rates on 28-day
Mexican treasury bills, or Cetes, was 9.20%, 6.82% and 6.23% during 2005, 2004
and 2003 respectively. On May 23, 2006, the 28-day Cetes rate was 7.01%. 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

         After 71 years of rule by the Institutional Revolutionary Party
("PRI"), Vicente Fox from The National Action Party ("PAN") was elect President
of Mexico in 2000. During his administration 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 impact on the Mexican economy.

         In July 2006, we will have a new presidential election and also we will
elect a new legislature.

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

                                        5
<PAGE>

         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 past 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.

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 that may affect future purchases of feed ingredients.

         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. Mexico, to avoid having the disease
spread from the United States, imposed certain restrictions on the importation
of chicken from affected U.S. states. In 2004 and 2005, AIV was still present in
Asian countries and the United States. During 2004 and 2005, Mexico has been
eliminating some restrictions on the importation of chicken from certain U.S.
states as the sanitary conditions in those states improve. In October 2005,
Mexico lifted importation restrictions on all U.S. states, except for 11
counties in the state of Texas.

                                        6
<PAGE>

         In the past we have experienced limited outbreaks of various diseases
that have resulted in higher mortality rates.

         During 2005, there was an ample diffusion on the media worldwide of the
widespread of a particular strain of AIV (H5N1), mainly in Asia and some
European countries, which affected the consumption of chicken in those
countries. This strain has not been present in the United States or in Latin
America so far.

         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 vulnerable 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

         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 2005, we accounted for approximately 30.9% 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.

                                        7
<PAGE>

         We face increased competition from U.S. producers

         In January 2003, import quotas and most tariffs on poultry, eggs and
swine were eliminated through 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.

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, 2005, 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:

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

                  o    directly, or

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

         o    the perception arose that such a sale could occur.

                                        8
<PAGE>

         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.

         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 affect 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.

                                        9
<PAGE>

         In our special shareholders' meeting held on April 26, 2006, the
conversion of our Series L Shares to Series B Shares on a one to one basis was
approved.

         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
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:

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

         o    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.

         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. All of our production and sales are made in Mexico.

         We are the largest poultry producer in Mexico. In 2005, we produced
more than 8.0 million chickens per week and accounted for approximately 30.9% 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:

                                       10
<PAGE>

         o    preparing feed;

         o    breeding, hatching and growing chickens; and

         o    processing, packaging and distributing chicken products.

         Sales of chicken products accounted for 80.1% of our net revenues in
2005. Please also see the table under Item 5. "General--Results of Operations."

         We are also a significant producer of commercial balanced feed. We sell
our feed both through distributors and directly to small producers. During 2005,
we sold approximately 7,500 tonnes of feed per week to external customers, which
amounted to 7.2% of our total revenues for that year.

         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 8.7% of our net revenues in 2005.

         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 laying hens.

         We also sell swine on the hoof to meat packers for pork product
production. In 2005, sales of swine accounted for 1.0% of our net revenues.

         The remaining portion of our net revenues in 2005 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:

<TABLE>
<CAPTION>
                                           BACHOCO SALES VOLUME
                                         (IN THOUSANDS OF TONNES)
                                          YEAR ENDING DECEMBER 31,
                       --------------------------------------------------------------
                          2001         2002         2003         2004        2005
                       ----------   ----------   ----------   ----------   ----------
<S>                         <C>          <C>          <C>          <C>          <C>
Chicken ............        662.2        665.4        655.5        733.0        773.0
Eggs ...............         85.6        131.7        132.1        138.1        140.6
Swine ..............          9.0          9.0          8.5          9.1          9.6
Balanced Feed ......        346.0        324.7        316.2        320.7        389.6
</TABLE>

         Due to acquisitions, internal growth and improved efficiency, the
volume of chicken we sold in 2005 showed an increase of 16.7 % over the volume
we sold in 2001. We improved the efficiency of the facilities we acquired to
take full advantage of production capacity and distribution opportunities.

                                       11
<PAGE>

         In the Mexican poultry industry 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 compete 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 and needs.

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.

         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.

         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, 2005, 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
the 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.281.4 million (expressed in constant pesos as of
December 31, 2005), which reduced retained earnings on our balance sheet. As of
May 15, 2006, we had repurchased 187,400 units.

         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.

                                       12
<PAGE>

         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.

         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 June 29, 2005 we acquired certain assets of Grupo Sanjor, a private
poultry company located in the Yucatan Peninsula, with production of
approximately 300 thousand chickens per week and 100 thousand table egg laying
hens, which allow us to reinforce our leadership in this region of the country.

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:

         o    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.

                                       13
<PAGE>

         o    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, color and presentation 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.

         o    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.

         o    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:

         o    In 2003, we made capital expenditures of Ps.817.2 million net,
              with which we:

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

                  o    improved and expanded our distribution network; and

                  o    increased production capacity in our Northwest Complex
                       and Yucatan Peninsula Complexes.

         o    In 2004, we made capital expenditures of Ps.449.8 million net,
              with which we:

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

                  o    improved and expanded our distribution network;

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

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

         o    In 2005, we made capital expenditures of Ps.776.4 million net,
              with which we:

                  o    continued to update our transportation fleet, farms,
                       processing plants and feed mills, which expenditures
                       continue to the present;

                  o    increase the capacity and update our rendering plants,
                       which expenditure continue to the present; and

                  o    made the acquisition of certain assets of Grupo Sanjor.

                                       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 it is the leading meat consumed in Mexico according to data from UNA.
Traditionally, further-processed chicken, such as heat-and-serve products,
frozen dinners, chicken nuggets and other similar foods, have found limited
acceptance among Mexican consumers due to historical consumer preferences for
fresh chicken.

         In recent years, the further-processed chicken line is growing rapidly;
we participate significantly in the market and try to lead the supplying of
these products. We estimate that further-processed chicken products currently
account for approximately 5.0% of the chicken sold in Mexico.

         Mexican consumers 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 15.6% from 2001 to 2005. Chicken is the
leading meat consumed in Mexico, and it accounted for approximately 47.6% of all
meat produced in Mexico in 2005. The following table sets forth total Mexican
production of chicken, pork and beef for 2001 to 2005:

                  MEXICAN PRODUCTION OF CHICKEN, BEEF AND PORK
                            (IN THOUSANDS OF TONNES)*

<TABLE>
<CAPTION>
                          2001         2002         2003         2004         2005
                       ----------   ----------   ----------   ----------   ----------
<S>                         <C>          <C>          <C>          <C>          <C>
Chicken ............        2,067        2,187        2,290        2,390        2,498
Beef ...............        1,428        1,451        1,496        1,543        1,559
Pork ...............        1,065        1,085        1,100        1,150        1,088
</TABLE>

----------
*Sources: UNA

         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.
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 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. In 2005, chicken prices decreased by approximately 1.7%, mainly as a
result of a decrease in the cost of the main feed ingredients worldwide, and a
strong oversupply during the last quarter 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 by 6.7% in 2001 due to declines in chicken
prices and increased supply. The trend in increased consumption continued in
2002, 2003, 2004 and 2005, with increases of 5.8%, 5.9%, 3.4% and 5.2% 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, supermarket broiler and
further-process products.

     "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 28.0% 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 25.0% 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 26.0% 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
     14.0% (including further-process products) 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 7.0% of the
     volume of the chicken sold by producers in Mexico.

         We 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,
                            -----------------------------------------------------------------------------------------------------
                                   2001                 2002                 2003                 2004                 2005
                            -----------------    -----------------    -----------------    -----------------    -----------------
                                       % OF                 % OF                 % OF                 % OF                 % OF
                            VOLUME     TOTAL     VOLUME     TOTAL     VOLUME     TOTAL     VOLUME     TOTAL     VOLUME     TOTAL
                            -------   -------    -------   -------    -------   -------    -------   -------    -------   -------
                                                         (THOUSANDS OF TONNES, EXCEPT PERCENTAGES)
<S>                           <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>
Public Market and
   Rotisserie ...........     339.3      51.3      307.1      46.2      288.1      44.0      319.1      43.5      349.6      45.2
Supermarket Broiler,
   Chicken Parts and
   Other(1) .............     151.3      22.8      191.6      28.8      194.9      29.7      219.6      30.0      219.1      28.4
Live ....................     171.6      25.9      166.7      25.0      172.5      26.3      194.4      26.5      204.3      26.4
                            -------   -------    -------   -------    -------   -------    -------   -------    -------   -------
Total ...................     662.2     100.0%     665.4     100.0%     655.5     100.0%     733.1     100.0%     773.0     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 60
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.

         We have expanded our distribution network, which now covers almost all
of Mexico:

         o    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.

         o    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.

                                       17
<PAGE>

         o    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.

         o    During 2004, we finished our projects to expand the facilities at
              our Northwest Complex and Peninsula Complex.

         o    In 2005, we acquired assets of Grupo Sanjor, a private producer of
              chicken and table eggs located in the Yucatan Peninsula.

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

         o    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.

         o    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.

         o    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>

         o    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.

         o    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.

         o    frozen and further-processed poultry

              o    Frozen, heat-and-serve and other further-processed poultry
                   products make up a small proportion of total Mexican poultry
                   consumption today. Mexican consumers have a greater
                   preference for fresh chicken than their U.S. counterparts.
                   Demand for these kinds of fresh products is growing rapidly.
                   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.

              o    Our 2005 sales of fresh further-processed poultry products
                   increased approximately 30% over 2004 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

         Mexico has one of the largest per capita consumption of eggs in the
world with 22 kilograms, according to data from the UNA. Mexican egg consumption
per capita increased 7.8% from 2001 to 2005. This high level of consumption is
due in part to the fact that eggs are a relatively the cheapest source of
protein in Mexico.

         The Mexican egg industry is more fragmented than the broiler industry
but has experienced some degree of consolidation in recent years, including
acquisitions made by us. According to UNA, the ten largest producers of eggs in
Mexico now account for approximately 44.0% 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 in Mexico, we have become one of the largest
egg producers in Mexico with an estimated market share of 6.2% in 2005. 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.

         Eggs in Mexico have traditionally been distributed in large 360-egg
cases through wholesalers to retailers. The retailers, which are typically small
grocery shops, sell the eggs by weight to consumers. At present, approximately
22% of the eggs sold in Mexico are sold in packaged form, 8% are sold in
processed form and approximately 70% are sold in bulk to wholesalers. The sales
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.

                                       19
<PAGE>

         We sell both brown and white eggs. Brown eggs presently account for
approximately 9.0% of Mexican egg consumption. The branded carton of brown eggs
is a premium product in the Mexican market. We believe 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 the leading producer of brown eggs in Mexico and estimate
that our production accounts for approximately 26.9% of the Mexican brown egg
market and 60.0% 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 to build new farms to increase production capacity
of table eggs in our Northwest complex, at Mexicali, near the U.S. border. We
completed this project in the second semester of 2005.

         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.

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).

BALANCED FEED

         According to Camara Nacional de la Industria de Transformacion
("CANACINTRA"), Mexican production of balanced feed increased from 20.0 million
tonnes in 1999 to 23.9 million tonnes in 2004. In 2004, 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 mostly produce for themselves and occasionally for other
producers. Integrated producers account for approximately 64.5% 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. Presently, we have four feed plants dedicated to
produce balance feed to third parties. We estimate that our balanced feed
business comprises approximately 4.6% of the market share of the commercial
(non-integrated) balanced 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. In 2004, our swine prices
increased by more than 20.0% as a result of increase in the cost of feed
ingredients and a more normalized supply and imports, and, during 2005, our
swine prices decreased 9.0% due to larger supplies in the Mexican market.
Traditionally, Mexicans consume less swine and swine products than chicken and
eggs.

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.

         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 lower our cost of production as the cost of our
ingredients more closely tracks prices in the international commodity markets.

         At present, we take advantage of lower-cost feed ingredients from
Mexican sources, when available. In 2005, we obtained approximately 30.1% 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

         According to the UNA, 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 54.0% of total

                                       21
<PAGE>

Mexican poultry production; the balance is distributed among approximately two
hundred small- and medium-sized integrated and non-integrated producers. 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.

         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 2005, imports of poultry products increased 21.8% in volume over
imports in 2004. This increase was caused in part by a strong demand in Mexico,
and the elimination of temporary bans of imports by sanitary and health
authorities. Mechanically de-boned poultry accounted for approximately 41.3% of
the imports.

         We expect that competition from U.S. exporters will continue to
increase. However, Mexican consumer acceptance of frozen poultry products is
still low, and we do not anticipate a significant grow in the near future.

EGGS

         We are one of the largest producers of eggs in Mexico, with
approximately 6.2% of total Mexican egg production at the end of 2005. According
to UNA, the top nine producers together accounted for approximately 44.0% of
total Mexican egg production, with the balance distributed among 160 smaller
producers.

BALANCED FEED

         Of the registered producers of feed in Mexico, integrated firms produce
approximately 64.5% of total production for their internal use, and the
remaining 35.5% is produced for sale to third parties. We estimate a market
share of approximately 4.6% in our feed product line.

SWINE

         The Mexican swine industry is highly fragmented, and no producer has
more than 10.0% of the market. On December 31, 2005, 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

         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 United States. 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:

         o    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%.

         o    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%.

         o    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.

         o    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:

         o    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 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.

         o    According to the safeguard, for 2005 the tariff in effect was
              59.3% for imports of chicken leg quarters above the quota of
              102,010 tonnes.

         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.

                                       23
<PAGE>

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.

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 94.1%
of consolidated total assets as of December 31, 2005, and 92.0% of our
consolidated revenues for the year ended December 31, 2005. All of our
subsidiaries are directly owned by us in the percentage listed below. None of
these subsidiaries have any subsidiaries of their own.

                                       24
<PAGE>

         The following table shows our main subsidiaries as of December 31,
2003, 2004 and 2005:

<TABLE>
<CAPTION>
                                                            PERCENTAGE EQUITY INTEREST
                                                          ------------------------------
                                                            2003       2004       2005
                                                          --------   --------   --------
<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        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        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.14.4 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.

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. In Gomez Palacio, Durango (in La Laguna
Region), we have a complex which consists of broiler grow-out farms, a broiler
processing plant and egg production farms representing more than half of our
total egg production capacity.

         The following table summarizes the types and number of each type of our
production facilities as December 2005:

                          BACHOCO PRODUCTION FACILITIES

TYPE                                                                  NUMBER
------------------------------------------------------------------   --------
Chicken breeding farms............................................       146
Broiler grow-out farms............................................       440
Broiler processing plants.........................................         7
Egg incubation plants.............................................        18
Egg production farms..............................................       104
Swine breeding farms..............................................         1
Swine grow-out farms..............................................        12
Feed plants.......................................................        15

                                       25

<PAGE>

         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 represented 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 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 335,675 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 Guanajuato, Mexico, 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, 2004 and 2005 and for the years ended December 31, 2003, 2004
and 2005.

         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, 2005. 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, 2003, 2004
and 2005.

                                       26
<PAGE>

MEXICAN ECONOMIC CONDITIONS

         During 2002, the Mexican economy was 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-day Cetes decreased to an average of 6.2%, 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-day Cetes
increased to an average of 6.8% for the year and an average of 8.5% in the last
month of the year. Inflation increased to a rate of 5.2%, and the peso
appreciated against the U.S. dollar by 0.8% at year-end.

         In 2005, the Mexican economy was stable and GDP increased by 3.0%; the
inflation rate was 3.3%, and rates on 28-day Cetes increased to an average of
9.2% for the year and an average of 8.2% during December 2005. The peso
appreciated against the U.S. dollar by 4.9% 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.

         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 an important 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 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. In 2005, average producer prices
decrease by approximately 1.7%, mainly as a result of a decrease in the cost of
the main feed ingredients worldwide, and a strong oversupply during the last
quarter of the year.

         As of December 31, 2005, we have an outstanding total indebtedness of
Ps.144.6 million all denominated in Mexican pesos. We have no liabilities
denominated in U.S. dollars, as compared to 0.2% of our total indebtedness we
had on December 31, 2004 (see Note 7 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 2005, we had
foreign exchange loss of Ps.57.7 million due to fluctuations of the peso against
the U.S. dollar, as compared to a foreign exchange gain of Ps.46.6 million in
2004 and a foreign exchange gain of Ps.75.0 million in 2003.

                                       27
<PAGE>

         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, increased by 11.8% in 2004 and 5.5% during
2005.

         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; as for 2005 the
increase was mainly to productivity improvements achieved by the Company and the
Sanjor acquisition in the second quarter of 2005.

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 an increase in the cost
of our main feed ingredients which pushed the prices up in the industry, a
moderate supply of chicken in the Mexican market, mainly in the second part of
the year, and our commercial and marketing strategies. In 2005, our chicken
prices increased 1.6%, as a result of a strong demand in the first three
quarters of the year, partially compensated by weak prices in the last quarter
of 2005.

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

         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. In 2005, our egg prices decreased by 15.7% as a
result of continued oversupply conditions in the Mexican market due to domestic
production.

                                       28
<PAGE>

         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 very modest growth in domestic production and imports. In
2004, our swine price increased by 25.8% as there was only a moderate supply in
the Mexican market. In 2005, our swine prices decreased by 9.0% as imports
increased.

         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.

         At present, Mexican feed prices tend to parallel U.S. and international
prices. 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%, with the remaining imported primarily from the United States. In
2003, the percentage of grain purchased from domestic markets was 38%. In 2004,
it was approximately 35%, and in 2005 it was 30%.

         Due to low inventories worldwide at the end of 2003 and during 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. As
for 2005, prices of our raw materials were on the average lower compared to
2004; during the year prices were rather constant with a slight trend to
increase during the second part of the year.

         In recent years, reductions in tariffs under NAFTA have generally
resulted in reductions of our costs of importing feed ingredients.

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:

         o    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.

                                       29
<PAGE>

         o    During 2002, such acquisitions 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.

         o    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. 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.

         o    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
              0.7 million of lying hens.

         o    In November 2004, the Company acquired all the shares of Secba,
              S.A. de C.V., from a related party for Ps.14.4 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.3 million, and was recognized in other income.

         o    In June 2005, the Company acquired certain assets of Sanjor, a
              private poultry company located in the Yucatan Peninsula, with
              production of approximately 300 thousand chickens per week and 100
              thousand table egg laying hens, which allow us to reinforce our
              leadership in this region of the country.

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,
                                                          ----------------------------------
                                                            2003         2004         2005
                                                          --------     --------     --------
                                                             (PERCENTAGE OF NET REVENUES)
<S>                                                          <C>          <C>          <C>
Net revenues ..........................................      100.0%       100.0%       100.0%
Cost of sales .........................................      (81.4)       (81.1)       (71.9)
Gross profit ..........................................       18.7         18.9         28.1
Operating income ......................................        4.0          6.4         15.2
Comprehensive financing (cost) income .................        1.2         (0.5)        (0.5)
Income tax, asset tax and employee profit sharing .....       (1.0)        (0.8)        (2.4)
Net income ............................................        5.0          5.3         12.2
</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:

                                       30
<PAGE>

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                          ----------------------------------
                                                            2003         2004         2005
                                                          --------     --------     --------
                                                             (PERCENTAGE OF NET REVENUES)
<S>                                                          <C>          <C>          <C>
Chicken ...............................................       77.7%        78.5%        80.1%
Feed ..................................................        7.1%         6.6%         7.2%
Eggs ..................................................       11.1%        10.9%         8.7%
Swine .................................................        0.9%         1.1%         1.0%
Other products ........................................        3.2%         2.9%         3.0%
                                                          --------     --------     --------
Total .................................................      100.0%       100.0%       100.0%
                                                          ========     ========     ========
</TABLE>

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2005

GENERAL

         In 2005, the Mexican economy showed signs of stability: GDP grew by
3.0%, the annual inflation increased by 3.3%, and the Mexican peso appreciated
against the U.S. dollar by 4.9% at year-end.

         According to UNA, the production volume of the Mexican chicken industry
grew approximately 4.5% in 2005. This increase in supply in the chicken
industry, combined with the stability of the Mexican economy, and a stable cost
of main raw materials, resulted in an increase in our chicken prices, mostly
during the first nine months of the year.

         With respect to the egg industry, domestic production increased by
almost 3.6%, which contributed to the excess supply in the market during the
year.

         In spite of a significant increase in the supply, we were able to
increase our sales volume in all our main product lines; we sold our entire
production and achieved an operating margin of 15.2%.

NET REVENUES

         Consolidated net revenues during 2005 amounted to Ps.14.5 billion, an
increase of Ps.0.7 billion (or 5.3%), from Ps.13.7 billion in 2004. This
increase was mostly due to increases in the sales of all our main product lines,
which resulted from increases in volume and prices of those lines.

         Our chicken sales increased by 7.2% due to an increase in price of 1.6%
and in volume of 5.5%. This increase was due mainly to productivity improvements
achieved by the Company and the Sanjor acquisition in the second quarter of this
past year.

         Our revenues from egg sales decreased by 14.1% in 2005, as a result of
a 15.7% price decrease, partially offset by an increase of 1.9% in sales volume.
This reduction in price was mainly due to oversupply conditions in the Mexican
market during most of the year.

         There was a significant growth in sales of 14.0% of balanced feed,
while the volume achieved 21.5% compared to 2004. This was the result of focused
strategies that Bachoco has implemented in this line of business.

         We recognized Ps.27.7 million in our 2005 revenue as a result of fair
valuing part of the Company's inventories, see Note 1-q.

                                       31
<PAGE>

COST OF SALES

         The consolidated cost of sales in 2005 was Ps.10.4 billion,
representing a decrease over 2004 of Ps.07 billion, or 6.6%, as a result of
lower costs of our main feed supplies compared to 2004, and also the Company's
ongoing efforts to improve efficiency in all its processes.

GROSS PROFIT

         Bachoco's gross profit reached Ps.4.1 billion during 2005, a
significant improvement when compared with Ps.2.6 billion reached in 2004. Gross
profit, as a percentage of net sales, was 28.1%, compared to 18.9% reached in
2004. The increase in our gross profit and profit margins resulted mainly from a
decline in costs and an increase in volume sold.

SALES, GENERAL AND ADMINISTRATIVE EXPENSES

         Sales and administrative expenses in 2005 amounted to Ps.1.9 billion.
This represents an increase of only 8.3% over 2004. The increase was used to
market and distribute the larger volume sold of our products. As a percentage of
net revenues, selling, general and administrative expenses increased to 12.8% in
2005, compared to 12.5% in 2004.

OPERATING INCOME

         Consolidated operating income in 2005 totaled Ps.2.2 billion, an
increase of 149.7% over the previous year, as a result of an increase in sales
and a decrease in the cost of sales. The operating margin was 15.2% in 2005
compared to 6.4% in 2004.

COMPREHENSIVE COST OF FINANCING

         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 cost of financing had negative impact (loss) of Ps.68.5
million, as a result of a foreign exchange loss, loss in the monetary position
and financial expenses that were partially offset by larger financial products.

OTHER INCOME, NET

         Other income in both 2005 and 2004 was attributable mainly to sales of
used equipment, income from government supports and miscellaneous services. It
represented a net expense of Ps.20.8 million in 2005 as compared to a net income
of Ps.31.9 million in 2004.

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 more than double
reached in 2004, from Ps.840.2 million in 2004 to Ps.2,113.3 million in 2005,
due primarily to an increase in operating income.

                                       32

<PAGE>

NET INCOME

         Net income for 2005 increased more than twice, to Ps.1,769.4 million
compared to Ps.730.2 million in 2004. The increase was mainly due to better
operating results. We increased our net income in 2005 by Ps.18.1 million
derived from the elimination of goodwill amortization.

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 5.2%, 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.13.7 billion, an
increase of 17.6% from Ps.11.7 billion in 2003. These changes were mainly the
result of increases in volume and prices of our main product 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 sales 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 an
8.7% price increase, and an increase in volume sold of 1.4%.

         We   recognized Ps.18.1 million in our 2004 revenue as a result of fair
valuing part of the Company's inventories, see Note 1-q.

                                       33
<PAGE>

COST OF SALES

         The consolidated cost of sales in 2004 was Ps.11.1 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.

GROSS PROFIT

         Gross profit increased by 19.2%, from Ps.2.2 billion in 2003 to Ps.2.6
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.'

         We recognized a charge to our sales and general administrative expenses
of Ps.16.3 million as a result of adoption of Bulletin D-3 in 2005. See Note 2-h
to our audited financial statements.

OPERATING INCOME

         Consolidated operating income in 2004 increased year-over-year by 87.8%
to Ps.882.1 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.135.9 million in 2003, and we had
a comprehensive financing cost of Ps.73.9 million in 2004. The main difference
in our 2004 result as compared with the result in 2003 was due to interest
expenses from Ps.26.9 million in 2003 to Ps.125.6 million in 2004, mainly due to
interest expenses and financial instruments used for purchasing of feed
ingredients. We also have larger losses on net monetary position because we
increased our active position and had larger interest income in 2003.

                                       34
<PAGE>

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.31.9
million in 2004 as compared to other income of Ps.24.3 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.630.0 million in 2003 to Ps.840.2 million in 2004, due primarily to an
increase in operating income.

NET INCOME

         Net income for 2004 increased by 24.8% to Ps.730.2 million compared to
Ps.586.4 million in 2003. The increase was mainly due to better operating
results.

INCOME TAX, ASSET TAX AND EMPLOYEE PROFIT SHARING, YEAR 2005

         For a more detailed discussion on this topic, please see Note 14 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 taxed corporate income at a rate of 35% for
2002, with a gradual yearly decrease of one percent, until the tax rate was
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.10.4 million in 2004, and Ps.26.3 million in 2005.

         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.3,355.4 million, on January 1,
2002. On December 31, 2005, this loss has been carried forward in full.

                                       35
<PAGE>

         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). The asset tax in 2003, 2004 and 2005 amounted to Ps.13.9
millions, Ps.13.2 million and Ps.19.8 million, respectively. In each of the
three years we credited against these amounts the income tax paid in such years
of Ps.12.2 million, Ps.11.0 million and Ps.16.9 million, respectively.

         As of December 31, 2005, we had Ps.10.8 million in asset tax credits.

         In 2005, we recognized a total income tax and asset tax charge of
Ps.340.7 million, compared to a total income and asset tax charge of Ps.106.9
million in 2004 and Ps.115.1 million in 2003, due to the increase in income
before tax and asset taxes, as a consequence of higher operating income. (See
Note 14 of the Financial Statements).

         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. (See Note 14 of the Financial Statements).

LIQUIDITY AND CAPITAL RESOURCES

         Our working capital (current assets less current liabilities) increased
year-over-year from Ps.3.9 billion on December 31, 2004 to Ps.4.8 billion on
December 31, 2005. We believe that our working capital is sufficient for our
present requirements. The ratio of current assets to current liabilities on
December 31, 2005 was 6.0, as compared to the ratio of 6.1 on December 31, 2004.
Cash and cash equivalents were Ps.3.2 billion on December 31, 2005, representing
an increase of Ps.751.7 million from the previous year primarily due to cash
generated by operations.

         Inventories were Ps.1.6 billion as of December 31, 2005, representing
an increase of Ps.136.0 million from the previous year.

         Notes payable to banks, including the current portion of long-term
debt, equaled Ps.92.7 million as of December 31, 2005, a decrease of Ps.10.3
million from December 31, 2004.

         Stockholders' equity increased to Ps.12.5 billion on December 31, 2005
from Ps.11.2 billion on December 31, 2004.

         Long-term debt on December 31, 2005 represented 0.4% of our
capitalization, as compared to 0.7% on December 31, 2004.

         In 2005, capital investments amounted to Ps.773.9 million, all of which
were financed from resources generated from our own operations. These capital
investments were allocated mainly to renew the transportation fleet, increase
the capacity of our rendering plants, productivity projects and the acquisition
of Grupo Sanjor.

                                       36
<PAGE>

         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:

         o    Notes payable to banks, as of December 31, 2005, were Ps.71.9
              million. On December 31, 2005, the weighted average interest rate
              on short-term notes payable was 7.7%.

         o    Long-term debt to banks, as of December 31, 2005, were Ps.51.9
              million outstanding (excluding current portion), which mature from
              2005 to 2010. On December 31, 2005, the weighted average interest
              rate on long-term debt was 11.4%.

         The following table summarizes certain contractual liabilities as of
December 31, 2005. The table does not include short-term debt, accounts payable
or pension liabilities.

                                         PAYMENTS DUE BY PERIOD
                          (MILLIONS OF CONSTANT PESOS AS OF DECEMBER 31, 2005)
                          ----------------------------------------------------
                                     LESS THAN   1 TO 3     3 TO 5   5 OF MORE
CONTRACTUAL OBLIGATIONS     TOTAL      1 YEAR     YEARS     YEARS      YEARS
-----------------------   ---------  ---------  --------   --------   -------
Long-term debt.........   Ps.  72.8   Ps. 20.8  Ps. 39.6   Ps. 12.3  Ps.   0.0
Operating leases.......        83.7       22.8      47.2       10.7        3.0
                          ---------  ---------  --------   --------  ---------
Total .................   Ps. 156.5   Ps. 43.6  Ps. 86.8   Ps. 23.0  Ps.   3.0
                          =========  =========  ========   ========  =========

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, and (iv) the amortization of goodwill. Goodwill amortization is not
required for fiscal years beginning January 2005, due to the new Statement B-7
issued by the Mexican Institute of Public Accountants (see Note 17 to the
consolidated financial statements for a detailed description). Each of these
differences also affects our balance sheet.

         Our consolidated net income under U.S. GAAP was Ps.546.8 million in
2003, Ps.765.0 million in 2004 and Ps.1,753.7 million in 2005, compared to
Ps.586.4 million, Ps.730.2 million and Ps.1,769.4 million, respectively, under
Mexican GAAP. For further explanation, please see Note 17 to the consolidated
financial statements.

                                       37
<PAGE>

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.
Accumulated depreciation expense for property, plant and equipment in 2005
amounted to Ps.5,457.1 million. As applied to our 2005 financial results, the
depreciation was Ps.461.1 million, or 3.2% of our net revenues. For further
explanation, see Notes 2 and 5 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

         Since 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. 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.

         Poultry being fattened (less than 6.5 weeks old), incubatable eggs,
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.

                                       38
<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.

         For more details, see "Inventories and biological assets" in Note 4 and
Note 2q 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.34.9 million in 2005 that represents 0.2% of our
total annual sales. See Note 2f of our Audited Financial Statements.

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
fewer 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 2006, their
positions and their years of service:

                                       39
<PAGE>

<TABLE>
<CAPTION>
                                                                                            YEARS AS
NAME                                              POSITION                                  DIRECTOR
-----------------------------------------------   -------------------------------------   ------------
<S>                                               <C>                                          <C>
Enrique Robinson Bours Almada..................   Honorary Chairman of the board               52
Francisco Javier R. Bours Castelo..............   Chairman of the board and Proprietary        24
                                                  Shareholder Director
Mario Javier Robinson Bours Almada.............   Proprietary Shareholder Director             52
Juan Bautista Salvador Robinson Bours..........   Proprietary Shareholder Director             52
Arturo Bours Griffith..........................   Proprietary Shareholder Director             12
Jose Eduardo Robinson Bours Castelo............   Alternate Director                           12
Jesus Enrique Robinson Bours Munoz.............   Proprietary Shareholder Director             12
Juan Salvador Robinson Bours Martinez..........   Alternate Director                           12
Jose Francisco Robinson Bours Griffith.........   Alternate Director                           12
Guillermo Pineda Cruz..........................   Alternate Independent Director               12
Ricardo Aguirre Borboa.........................   Independent Director                         12
Cristobal Mondragon Fragoso....................   Secretary of the board                       10
Avelino Fernandez Salido.......................   Independent Director                          3
Octavio Robinson Bours Griffith................   Proprietary Shareholder Director              9
Humberto Schwarzbeck Noriega...................   Independent Director                          3
Jesus Rodolfo Robinson Bours Munoz.............   Proprietary Shareholder Director              4
</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 2005, 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 24 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.

         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 stockholders' meeting held on April 30, 2003. We ratified our board
of directors at our stockholders' meeting held on April 26, 2006. Our board, as
of June 2006, is composed of the following members:

                                       40
<PAGE>

         Proprietary Shareholder 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 Robinson Bours Griffith

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

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

         Life Honorary Chairman of the Board:
         ------------------------------------
         Enrique Robinson Bours Almada

         Francisco Javier R. Bours Castelo, Chairman of the board of directors,
has been a member of the board for 24 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., Industrias Boca, S.A. de C.V., and Promotora
Empresarial del Noroeste, S.A. de C.V., among others.

         Mario Javier Robinson Bours Almada, Proprietary Shareholder Director,
has been a member of the board for 52 years, and is a co-founder of Industrias
Bachoco S.A. de C.V.

         Juan Bautista S. Robinson Bours Almada, Proprietary Shareholder
Director, has been a member of the board for 52 years and is a co-founder of
Industrias Bachoco S.A. de C.V.

         Jesus Enrique Robinson Bours Munoz, Proprietary Shareholder Director,
has been a member of the board for 12 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 Shareholder Director,
has been a member of the board for 4 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.

                                       41
<PAGE>

         Arturo Bours Griffith, Proprietary Shareholder Director, has been a
member of the board for 12 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., and Taxis Aereos del Noroeste,
S.A. de C.V., among others.

         Octavio Robinson Bours Griffith, Proprietary Shareholder Director, has
been a member of the board for 9 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 a 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 12 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 12 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 12 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 12 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 de 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, and 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 (ITESM). 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 Chairman
of the Board of Promotora de Manufacturas S.A. de C.V., a private company
dedicated to production of automotive parts.

                                       42
<PAGE>

         Guillermo Pineda Cruz, Alternate Independent Director, has been a
member of the board for 12 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, and 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 26, 2006,
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.

EXECUTIVE OFFICERS

         Our executive officers as of December 31, 2005 are set forth in the
table below:

NAME                                   POSITION                     AGE
----------------------------------     -----------------------    ------
Cristobal Mondragon Fragoso.......     Chief Executive Officer      60
Daniel Salazar Ferrer.............     Chief Financial Officer      41
David Gastelum Cazares............     Marketing Director           54
Jose Luis Lopez Lepe..............     Personnel Director           58
Rodolfo Ramos Arvizu..............     Technical Director           48
Ernesto Salmon Castelo............     Operating Director           44

         Cristobal Mondragon Fragoso, Chief Executive Officer and Secretary of
the board of directors, 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, Marketing Director, 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 Medicine of Universidad Nacional Autonoma de Mexico (UNAM).

         Jose Luis Lopez Lepe, Personnel Director, 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.

                                       43
<PAGE>

         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, Operating Director, 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).

         In December 2005, Mr. Francisco Javier Espinoza Teja, Director of
Supply Chain, left the Company, and his activities were assigned to the others
Executive Officers.

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, 2004, Francisco Jose Sanchez Gonzalez was the statutory
auditor. Since 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:

                                       44
<PAGE>

         (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
              audit and reviewing the scope and terms of the auditor's
              engagement.

         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 26, 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, 2005, we paid approximately Ps.26.9
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, 2003, 2004 and 2005, we had approximately 18,495,
18,896 and 20,432 employees, respectively.

         In 2005, approximately 63% of our employees were members of labor
unions. Labor relations with our employees are governed by 47 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.

                                       45
<PAGE>

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.

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:

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

         o    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

         o    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, 2005, 90.9% of our Series B and 72.8% 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 65.7% of the Series
L Shares and 88.6% of the Series B Shares outstanding on December 31, 2005. In
total, the Control Trust and the Family Trust owned 496,500,000 Shares
outstanding on December 31, 2005.

                                       46
<PAGE>

         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, 2005:

<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 2006, 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.281.4 million in
constant pesos as of December 31, 2005 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 26, 2006, we capped the share repurchase program
for 2006 to a maximum amount of Ps.189.6 million, equivalent to approximately
6.0 million units (or 1.0 million ADS). As of May 15, 2006, we had repurchased
187.4 thousand 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.51.4 million, Ps.39.0 million and Ps.54.2 million for the
years ended December 31, 2003, 2004 and 2005, 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.

                                       47
<PAGE>

         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.4.9 million, Ps.2.8 million and Ps.4.3 million for the years ended
December 31, 2003, 2004 and 2005, respectively, for such transportation.

         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.166.5 million, Ps.202.5 million and Ps.179.7
million for the years ended December 31, 2003, 2004 and 2005, respectively.

         Our accounts payable to related parties totaled Ps.6.3 million and
Ps.6.2 million as of ended December 31, 2004 and 2005, respectively. These
transactions took place among companies owned by the same set of stockholders.
See Note 8 to the Consolidated Financial Statements.

         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 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, 2004 and 2005,
and for the years ended December 31, 2003, 2004 and 2005.

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.

         We declared and paid dividends in nominal pesos of Ps.297.7 million in
2003, Ps.238.9 million in 2004 and Ps.239.1 million in 2005.

                                       48
<PAGE>

         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

         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-q and Note 4 to 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. The adoption of this
accounting pronouncement gave rise to an increase in our net income in 2005 by
Ps.18.1 million, derived from the elimination of goodwill amortization. See Note
2-o to our Audited Financial Statements.

         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 associated with the purchase, sale and maturity of financial
instruments. Finally, the amendments broaden the disclosure rules established
under Bulletin C-2.

                                       49
<PAGE>

         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. There has been no material effect on our financial position as of
result of the adoption of this new accounting requirement in year 2005.

         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 in order 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.

         The adoption of Bulletin C-10 gave rise to a decrease of Ps.85.6
million in comprehensive income for the year ended December 31, 2005. See Note
2-m to our audited financial statements.

         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.
The adoption of Bulletin D-3 represented a charge to our results of operations
of Ps.16.3 million (Ps.11.6 net of taxes) in 2005. See Note 2-h to our audited
financial statements.

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, 2005,
there were 6,508,010 ADSs outstanding, representing 8.7% of the outstanding
Series B Shares and 21.6% of the outstanding Series L Shares, which were held by
five holders (including the Depositary Trust Company) with registered addresses
in the United States.

         The Units and the ADSs commenced trading on September 19, 1997. The
following tables set forth for each year from 2001 to 2005, for each quarter
from 2004 and 2005 and for each complete month from December 2005 to May 2006,
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.

                                       50
<PAGE>

                                  MEXICAN STOCK EXCHANGE
                                 (NOMINAL PESOS PER UNIT)

           YEAR                           HIGH                  LOW       CLOSE
----------------------------            ---------             -------    -------
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
2005 .......................              41.40                24.45       34.50

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

           YEAR                           HIGH                  LOW       CLOSE
----------------------------            ---------             -------    -------
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
2005........................              23.02                12.87       19.50

                                  MEXICAN STOCK EXCHANGE
                                 (NOMINAL PESOS PER UNIT)

           PERIOD                         HIGH                  LOW       CLOSE
----------------------------            ---------             -------    -------
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
First Quarter 2005..........              28.00                24.45       27.00
Second Quarter 2005.........              29.60                27.00       29.50
Third Quarter 2005..........              41.40                29.50       39.55
Fourth Quarter 2005.........              39.49                31.90       34.50

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

           PERIOD                         HIGH                  LOW       CLOSE
----------------------------            ---------             -------    -------
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
First Quarter 2005..........              15.25                12.87       14.70
Second Quarter 2005.........              16.53                14.51       16.50
Third Quarter 2005..........              23.00                16.57       21.69
Fourth Quarter 2005.........              21.85                17.14       19.50

                                  MEXICAN STOCK EXCHANGE
                                 (NOMINAL PESOS PER UNIT)

            MONTH                         HIGH                  LOW       CLOSE
----------------------------            ---------             -------    -------
December 2005...............              34.50                32.99       34.50
January 2006................              34.50                34.10       34.10
February 2006...............              34.00                33.50       33.50
March 2006..................              32.95                31.40       31.90
April 2006..................              37.90                31.70       37.90
May 2006....................              38.20                37.40       37.60

                                       51
<PAGE>

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

           PERIOD                         HIGH                  LOW        CLOSE
----------------------------            ---------             -------    -------
December 2005...............              19.50                18.42       19.50
January 2006................              19.58                16.67       17.00
February 2006...............              18.25                17.00       17.02
March 2006..................              17.43                16.33       17.43
April 2006..................              20.60                17.30       20.60
May 2006....................              20.90                19.66       20.15

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.

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"), such registration being a prerequisite to
becoming a member of the Mexican Stock Exchange.

                                       52
<PAGE>

Prior to registration in the RNVI, a brokerage house 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 on 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:

         o    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;

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

         o    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% but 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 in 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.

         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.

                                       53
<PAGE>

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."

         During the annual meeting held on April 26, 2006, shareholders approved
to proceed with the conversion of the Series L Shares into Series B Shares,
which have full voting rights.

         This conversion process includes two steps: separating the UBL Units
currently trading on the Mexican Stock Exchange into their component L and B
Shares. The Series L Shares would then be converted into Series B Shares (on a
one-to-one basis), thereby creating a single share class, the Series B Shares.
These shares would trade on the Mexican stock market. Each ADS will still
consist of 12 underlying shares, but they will all be Series B Shares.

         Having received approval, the Company has started the conversion
process, seeking to transfer as quickly as possible the benefits to its
shareholders. These changes will not affect the total social equity of
shareholders.

         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."

                                       54
<PAGE>

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."

         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 resulted 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 five 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 shareholder 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.

                                       55

<PAGE>

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

         o    the rights described below with respect to the appointment or
              election of up to two directors;

         o    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

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

                  o    transformation of the Company from one type of corporate
                       form to another;

                  o    any merger of the Company with another company where we
                       are not the surviving entity;

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

                  o    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 whom they elected, but only if the
appointments of all the other members of the board are 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.

                                       56
<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, and 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, and who hold at least 20% of the capital stock, may legally
object to the decisions of a general stockholders' 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 other commissaries are
revoked.

                                       57
<PAGE>

         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.

         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
              shareholder directors;

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

         (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.

         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.

                                       58
<PAGE>

         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.

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, who does not need to be a stockholder,
maintains his or her position for one year, but may continue to fulfill his or
her duties until a 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, 2005, 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 affected 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 affected 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.

                                       59
<PAGE>

         Except under limited circumstances, the bylaws require that any capital
increase affected 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.

                                       60
<PAGE>

         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.407.0 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.

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 affect 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 and (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.

                                       61
<PAGE>

         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.

                                       62
<PAGE>

         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:

         o    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.

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

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

                  o    Provide its opinion regarding any transaction with
                       related parties that is outside the scope of ordinary
                       business.

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

                                       63
<PAGE>

         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.

MATERIAL CONTRACTS

         Not Applicable.

EXCHANGE CONTROLS

         Ownership by foreigners of Mexican companies is regulated by the
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:

                                       64
<PAGE>

         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;

         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, (which changes may have retroactive effect) and
different interpretations. 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 (and
therefore the Series B Shares and the Series L Shares that each Unit represents)
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"). We do not currently maintain
calculations of our earnings and profits under U.S. federal income tax
principles. Because these calculations are not made, distributions should be
presumed to be taxable dividends for U.S. federal income tax purposes.

                                       65
<PAGE>

         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 by the U.S.
Holder or the Depositary, as the case may be, the 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.

         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, 2011 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 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.

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<PAGE>

PASSIVE FOREIGN INVESTMENT COMPANY RULES

         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.

         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 "U.S. Backup Withholding," 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 (and, if an applicable tax treaty
requires, is attributable to a U.S. permanent establishment or fixed base of
such Non-U.S. Holder) 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

         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 U.S. 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 provided that the U.S. Holder timely files the appropriate
forms with the U.S. Internal Revenue Service. 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.

                                       67
<PAGE>

MEXICAN TAXATION

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 (as defined below) 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 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 (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.

         The Mexican tax rules governing the taxation of gains of holders who
are not Mexican Residents 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 2003 should consult their own Mexican tax advisors on the Mexican
tax treatment of such dispositions.

         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 resided in another
country for more than 183 days, whether consecutive or not, during a calendar
year and can demonstrate that he or she has become a resident of that country
for tax purposes. 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 its headquarters are located in Mexico. 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 permanent 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.

                                       68
<PAGE>

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. 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 to 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 respects, including potential
economic recession in Mexico resulting from a devalued peso.

         We do not have debt denominated in U.S. dollars as of December 2005. We
experienced foreign exchange gains of Ps.75.0 million in 2003 and Ps.46.6
million in 2004. We had a loss of Ps.57.7 million in 2005, due to the net
position of our liabilities and assets, since we had more assets (cash and cash
equivalents) than liabilities denominated in U.S. dollars, and in 2005 the
Mexican peso appreciated during most of the year with respect to the U.S.
dollar.
         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.

                                       69
<PAGE>

         During 2004 and 2005, we have observed different strategies with
respect to derivatives which involve call and put options in U.S. dollars.

         At December 31, 2005, we maintained positions in several financial
instrument derivatives. For details, please see Note 3 to our Consolidated
Financial Statements.

         Based on our position in December 2005 (please see Note 12 to our
Consolidated Financial Statements), we estimate that a hypothetical 10%
devaluation of the Mexican peso against the U.S. dollar would result in losses
of Ps.6.8 million and gains of Ps.50.7 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, 2005, we had borrowings of approximately Ps.144.6 million pursuant
to variable rate debt instruments, representing approximately 0.9% of our total
assets.

         Based on our position on December 31, 2005, we estimate that a
hypothetical interest rate variation of 0.5% on our Mexican peso denominated
debt would result in increased interest expenses of approximately Ps.0.7 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.

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.

         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%, in 2004 it was
35.0%, and in 2005 it was approximately 30.1%.

                                       70
<PAGE>

         Based on results for 2005, we estimate that a hypothetical variation of
10% in the cost of our feed ingredients would have an impact of 5.7% 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, 2005. 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.

         There has been no change in our internal control over financial
reporting during 2005 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 committee has the authority and appropriate funding to
obtain outside advice, as it deems necessary, to carry out his duties. Also,
pursuant to local law, we have a statutory auditor who is responsible for
reviewing financial matters and, beginning in 2005, he is responsible for
reviewing and analyzing all financial data provided to our audit committee.

                                       71
<PAGE>

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
public accountants, during the fiscal years ended December 31, 2004 and 2005:

                                                    YEAR ENDED DECEMBER 31,
                                              ----------------------------------
                                                   2005               2004
                                              ---------------    ---------------
Audit fees ...............................    Ps.   2,429,000    Ps.  2,664,353
Audit-related fees .......................                 --                 --
Tax fees .................................            433,999            742,900
All other fees ...........................                 --                 --
                                              ---------------    ---------------
Total fees ...............................    Ps.   2,862,993    Ps.  3,407,253
                                              ===============    ===============

         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.

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.

                                       72
<PAGE>

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:
<TABLE>
<CAPTION>

EXHIBIT NO.                                 DESCRIPTION
-----------        -------------------------------------------------------------
   <S>             <C>
    1.1            Bylaws (estatutos sociales) of Industrias Bachoco, S.A. de
                   C.V. dated December 9, 2003, together with an English
                   translation (incorporated by reference to Exhibit 1.1 on our
                   Form 20-F filed with the U.S. Securities and Exchange
                   Commission on June 29, 2004).

    2.1            Form of Deposit Agreement, among Industrias Bachoco, S.A. de
                   C.V., the Depositary and holders from time to time of
                   American Depositary Receipts issued thereunder, including
                   the form of American Depositary Receipt (incorporated by
                   reference on our registration statement on Form F-1 filed
                   with the U.S. Securities and Exchange Commission on August
                   22, 1997 (File No. 333-7472)).

    2.2            Trust Agreement, dated April 1, 1995, among Banco
                   Internacional, S.A., Institucion de Banca Multiple, Grupo
                   Financiero Prime Internacional, as trustee, and the
                   stockholders of the Company named therein, together with an
                   English translation, (incorporated by reference on our
                   registration statement on Form F-1 filed with the U.S.
                   Securities and Exchange Commission on August 22, 1997 (File
                   No. 333-7472)).

    2.3            Trust Agreement, dated August 20, 1997, among Banco
                   Internacional, S.A., Institucion de Banca Multiple, Grupo
                   Financiero Bital, as trustee, and the stockholders of the
                   Company named therein, together with an English translation,
                   (incorporated by reference on our registration statement on
                   Form F-1 filed with the U.S. Securities and Exchange
                   Commission on August 22, 1997 (File No. 333-7472)).

    8.1            Subsidiaries of Industrias Bachoco S.A. de C.V.

   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.
</TABLE>

                                       73
<PAGE>

                                    SIGNATURE

         The registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.


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


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

Date: June 26, 2006

                                       74
<PAGE>

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


                        CONSOLIDATED FINANCIAL STATEMENTS


                                   YEARS ENDED
                        DECEMBER 31, 2003, 2004 AND 2005
                  WITH REPORT OF INDEPENDENT REGISTERED PUBLIC
                                 ACCOUNTING FIRM

                                       F-1
<PAGE>

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


                        CONSOLIDATED FINANCIAL STATEMENTS


                        December 31, 2003, 2004 and 2005


                                     CONTENT


Report of Independent Registered Public Accounting Firm

Consolidated Financial Statements:

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

                                       F-2
<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, 2004 and 2005, 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, 2005. 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 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, 2004 and
2005, and the consolidated results of their operations and changes in their
financial position for each of the three years in the period ended December 31,
2005, 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 2 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 4.

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

                                                Francisco Jose Sanchez Gonzalez

Mexico City, Mexico
March 15, 2006

                                       F-3
<PAGE>

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

                           CONSOLIDATED BALANCE SHEETS

          (THOUSANDS OF CONSTANT MEXICAN PESOS AS OF DECEMBER 31, 2005)

<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,
                                                               --------------------------------------------------
                                                                                                   (THOUSANDS OF
                                                                                                    U.S. DOLLARS)
                                                                                                      (NOTE 2)
                                                               --------------------------------------------------
                                                                    2004              2005              2005
                                                               --------------    --------------    --------------
<S>                                                            <C>               <C>               <C>
ASSETS
CURRENT ASSETS
 Cash and equivalents                                          Ps   2,416,025    Ps   3,167,745    $      298,057
 Accounts receivable:
  Trade, net                                                         409,584           474,265            44,624
  Value added and other recoverable taxes                            189,608           284,250            26,746
                                                               --------------    --------------    --------------
 Total accounts receivable                                            599,192           758,515            71,370
                                                               --------------    --------------    --------------
 Inventories, net -Note 4                                           1,502,333         1,638,288           154,148
 Biological current assets -Note 4                                    177,152           166,193            15,637
 Prepaid expenses and other current assets                             48,640            80,616             7,585
                                                               --------------    --------------    --------------
 TOTAL CURRENT ASSETS                                               4,743,342         5,811,357           546,797
                                                               --------------    --------------    --------------
 Property, plant and equipment, net -Note 5                         8,502,171         8,814,967           829,410
 Biological non-current assets -Note 4                                340,823           354,332            33,339
 Other assets                                                          11,118            13,627             1,282
 Intangible assets-Note 10                                             25,703            38,464             3,619
 Goodwill, net -Note 6                                                278,655           278,655            26,219
                                                               --------------    --------------    --------------
TOTAL ASSETS                                                   Ps  13,901,812    Ps  15,311,402    $    1,440,666
                                                               ==============    ==============    ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
 Notes payable to banks  -Note 7                               Ps      77,861    Ps      71,850    $        6,760
 Current portion of long-term debt  -Note 7                            25,113            20,837             1,961
 Accounts payable                                                     461,409           437,765            41,190
 Related parties -Note 8                                                6,313             6,157               579
 Income tax                                                            13,376            55,604             5,232
 Other taxes payable and other accruals -Note 9                       211,380           279,837            26,329
 Derivative financial instruments- Note 3                                   -           101,856             9,584
                                                               --------------    --------------    --------------
TOTAL CURRENT LIABILITIES                                             795,452           973,906            91,635
                                                               --------------    --------------    --------------

 LONG-TERM LIABILITIES:
 Long-term debt  -Note 7                                               74,952            51,914             4,885
 Deferred income tax -Note 14                                       1,737,263         1,694,373           159,425
 Labor obligations -Note 10                                            56,185            84,287             7,931
                                                               --------------    --------------    --------------
 TOTAL LIABILITIES                                                  2,663,852         2,804,480           263,876
                                                               --------------    --------------    --------------
 COMITMENTS AND CONTINGENCIES -NOTE 11

 STOCKHOLDERS' EQUITY -NOTE 13
 Majority stockholders' equity:
 Capital stock                                                      2,125,428         2,125,401           199,981
 Paid-in capital                                                      669,771           672,507            63,277
 Reserve for repurchase company stock                                 158,308           147,692            13,896
 Retained earnings                                                 12,107,565        12,589,545         1,184,564
 Net income for the year                                              726,244         1,767,741           166,329
 Minimum seniority premium liability adjustment -Note 10               (1,046)           (3,090)             (291)
 Deficit from restatement of stockholders' equity                  (3,280,214)       (3,439,669)         (323,642)
 Cumulative effect of deferred income tax -Note 14                 (1,310,590)       (1,310,590)         (123,315)
 Derivative financial instruments-Note 3                                    -           (85,559)           (8,050)
                                                               --------------    --------------    --------------
 Total majority stockholders' equity                               11,195,466        12,463,978         1,172,749

 Minority interest                                                     42,494            42,944             4,041
                                                               --------------    --------------    --------------
 TOTAL STOCKHOLDERS' EQUITY                                        11,237,960        12,506,922         1,176,790
                                                               --------------    --------------    --------------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    Ps 13,901,812     Ps  15,311,402    $    1,440,666
                                                               ==============    ==============    ==============
</TABLE>

SEE ACCOMPANYING NOTES.

                                       F-4
<PAGE>

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

                        CONSOLIDATED STATEMENTS OF INCOME

         (THOUSANDS OF CONSTANT MEXICAN PESOS, EXCEPT PER UNIT AMOUNTS,
                            AS OF DECEMBER 31, 2005)

<TABLE>
<CAPTION>
                                                                          YEARS ENDED DECEMBER 31,
                                                     ------------------------------------------------------------------
                                                                                                         (THOUSANDS OF
                                                                                                          U.S. DOLLARS)
                                                                                                            (NOTE 2)
                                                    -------------------------------------------------------------------
                                                          2003             2004             2005              2005
                                                     --------------   --------------   --------------    --------------
<S>                                                  <C>              <C>              <C>               <C>
Net revenues -Note 1                                 Ps  11,686,207   Ps  13,742,640   Ps  14,466,020    $    1,361,123
Cost of sales                                            (9,506,646)     (11,145,172)     (10,405,775)         (979,091)
                                                     --------------   --------------   --------------    --------------
Gross profit                                              2,179,561        2,597,468        4,060,245           382,032
Selling, general and administrative expenses             (1,709,831)      (1,715,327)      (1,857,593)         (174,783)
                                                     --------------   --------------   --------------    --------------
Operating income                                            469,730          882,141        2,202,652           207,249

Comprehensive financing income (cost):
  Interest income                                           168,250          105,236          293,164            27,584
  Interest expense and other financing costs                (26,889)        (125,557)        (194,048)          (18,258)
                                                     --------------   --------------   --------------    --------------
  Net interest income (expense)                             141,361          (20,321)          99,116             9,326
  Foreign exchange gain (loss), net                          74,995           46,553          (57,666)           (5,426)
  Loss on net monetary position                             (80,406)        (100,106)        (109,966)          (10,347)
                                                     --------------   --------------   --------------    --------------
                                                            135,950          (73,874)         (68,516)           (6,447)
                                                     --------------   --------------   --------------    --------------

Other income (expense), net                                  24,299           31,894          (20,843)           (1,961)
                                                     --------------   --------------   --------------    --------------

Income before income tax and asset tax,
employee profit sharing and cumulative
effect of change in accounting principle                    629,979          840,161        2,113,293           198,841
Income tax and asset tax -Note 14                          (115,125)        (106,904)        (340,698)          (32,057)
Employee profit sharing - Note 14                            (1,942)          (3,076)          (3,202)             (301)
                                                     --------------   --------------   --------------    --------------
Income before cumulative effect of
  Accounting change and minority income                     512,912          730,181        1,769,393           166,483
Cumulative effect of change in accounting
  principle, net of taxes - Note 4                           73,463                -                -                 -
                                                     --------------   --------------   --------------    --------------
NET INCOME                                           Ps     586,375   Ps     730,181   Ps   1,769,393    $      166,483
                                                     ==============   ==============   ==============    ==============

Majority net income                                         581,742          726,244        1,767,741           166,329
Minority net income                                           4,633            3,937            1,652               154
                                                     --------------   --------------   --------------    --------------
NET INCOME                                           Ps     586,375   Ps     730,181   Ps   1,769,393    $      166,483
                                                     ==============   ==============   ==============    ==============

Weighted average units outstanding
  (in thousands)                                            299,369          299,630          299,847           299,847
                                                     --------------   --------------   --------------    --------------

NET MAJORITY INCOME PER UNIT BEFORE
  CUMULATIVE EFFECT OF ACCOUNTING CHANGE             Ps        1.69  Ps         2.42   Ps        5.90    $         0.55
                                                     ==============   ==============   ==============    ==============
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
  PER UNIT                                           Ps       0.25    Ps           -   Ps           -    $            -
                                                     ==============   ==============   ==============    ==============
NET MAJOIRTY INCOME PER UNIT                         Ps        1.94   Ps        2.42   Ps        5.90    $         0.55
                                                     ==============   ==============   ==============    ==============
</TABLE>

SEE ACCOMPANYING NOTES.

                                       F-5
<PAGE>

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

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
         (THOUSANDS OF CONSTANT MEXICAN PESOS AS OF DECEMBER 31, 2005)

<TABLE>
<CAPTION>
                                           NUMBER OF                                   RESERVE FOR
                                           UNITS OF                                    REPURCHASE
                                         CAPITAL STOCK                    PAID-IN      OF COMPANY     RETAINED      NET INCOME
                                          (THOUSANDS)   CAPITAL STOCK     CAPITAL        STOCK        EARNINGS     FOR THE YEAR
                                         -------------  -------------  -------------  ------------  -------------  ------------
<S>                                            <C>      <C>            <C>            <C>           <C>            <C>
Balance at December 31, 2002                   297,466  Ps  2,124,234  Ps    603,630  Ps   188,441  Ps 10,441,708  Ps  1,670,994

Transfer of prior year's net income                  -              -              -             -      1,670,994     (1,670,994)
Repurchase of stock                               (300)          (164)             -        (5,795)             -              -
Sales of repurchased stock                       2,834          1,570         53,202             -              -              -
Cash dividends paid                                  -              -              -             -       (331,572)             -
Comprehensive income, net of tax                     -              -              -             -              -        581,742
                                         -------------  -------------  -------------  ------------  -------------  -------------
Balance at December 31, 2003                   300,000      2,125,640        656,832       182,646     11,781,130        581,742

Transfer of prior year's net income                  -              -              -             -        581,742       (581,742)
Repurchase of stock                             (1,110)          (592)             -       (24,338)             -              -
Sales of repurchased stock                         710            380         12,939             -              -              -
Cash dividends paid                                  -              -              -             -       (255,307)             -
Comprehensive income, net of tax                     -              -              -             -              -        726,244
                                         -------------  -------------  -------------  ------------  -------------  -------------
Balance at December 31, 2004                   299,600      2,125,428        669,771       158,308     12,107,565        726,244

Transfer of prior year's net income                                 -              -             -        726,244       (726,244)
Repurchase of stock                               (460)          (233)             -       (10,616)             -              -
Sales of repurchased stock                         400            206          2,736             -              -              -
Cash dividends paid                                                 -              -             -       (244,264)             -
Comprehensive income, net of tax                                    -              -             -              -      1,767,741
                                         -------------  -------------  -------------  ------------  -------------  -------------
BALANCE AT DECEMBER 31, 2005
   (NOTE 13)                                   299,540  Ps  2,125,401  Ps    672,507  Ps   147,692  Ps 12,589,545  Ps  1,767,741
                                         =============  =============  =============  ============  =============  =============
<CAPTION>


                                            MINIMUM
                                             LABOR      DEFICIT FROM    CUMULATIVE                      TOTAL
                                          OBLIGATIONS   RESTATEMENT OF   EFFECT OF     DERIVATIVE     MAJORITY
                                           LIABILITY    STOCKHOLDERS'    DEFERRED      FINANCIAL    STOCKHOLDERS'
                                          ADJUSTMENT       EQUITY       INCOME TAX    INSTRUMENTS      EQUITY
                                         -------------  -------------  -------------  ------------  -------------
<S>                                      <C>            <C>            <C>            <C>           <C>
Balance at December 31, 2002             Ps       (772) Ps (3,056,668) Ps (1,310,590) Ps         -  Ps 10,660,977

Transfer of prior year's net income                  -              -              -                            -
Repurchase of stock                                  -              -              -                       (5,959)
Sales of repurchased stock                           -              -              -                       54,772
Cash dividends paid                                  -              -              -                     (331,572)
Comprehensive income, net of tax                (1,200)       (69,044)             -                      511,498
                                         -------------  -------------  -------------  ------------  -------------
Balance at December 31, 2003                    (1,972)    (3,125,712)    (1,310,590)            -     10,889,716

Transfer of prior year's net income                  -              -              -                            -
Repurchase of stock                                  -              -              -                      (24,930)
Sales of repurchased stock                           -              -              -                       13,319
Cash dividends paid                                  -              -              -                     (255,307)
Comprehensive income, net of tax                   926       (154,502)             -                      572,668
                                         -------------  -------------  -------------  ------------  -------------
Balance at December 31, 2004                    (1,046)    (3,280,214)    (1,310,590)            -     11,195,466

Transfer of prior year's net income                  -              -              -             -              -
Repurchase of stock                                  -              -              -             -        (10,849)
Sales of repurchased stock                           -              -              -             -          2,942
Cash dividends paid                                  -              -              -             -       (244,264)
Comprehensive income, net of tax                (2,044)      (159,455)             -       (85,559)     1,520,683

                                         -------------  -------------  -------------  ------------  -------------
BALANCE AT DECEMBER 31, 2005
   (NOTE 13)                             Ps     (3,090) Ps (3,439,669) Ps (1,310,590) Ps   (85,559) PS 12,463,978
                                         =============  =============  =============  ============  =============

<CAPTION>

                                                            TOTAL
                                           MINORITY     STOCKHOLDERS'
                                           INTEREST        EQUITY
                                         -------------  -------------
<S>                                      <C>            <C>
Balance at December 31, 2002             Ps     46,454   Ps 10,707,431

Transfer of prior year's net income                  -              -
Repurchase of stock                                  -         (5,959)
Sales of repurchased stock                           -         54,772
Cash dividends paid                                  -       (331,572)
Comprehensive income, net of tax                (1,498)       510,000
                                         -------------  -------------
Balance at December 31, 2003                    44,956     10,934,672

Transfer of prior year's net income                  -              -
Repurchase of stock                                  -        (24,930)
Sales of repurchased stock                           -         13,319
Cash dividends paid                                  -       (255,307)
Comprehensive income, net of tax                (2,462)       570,206
                                         -------------  -------------
Balance at December 31, 2004                    42,494     11,237,960

Transfer of prior year's net income                                 -
Repurchase of stock                                           (10,849)
Sales of repurchased stock                                      2,942
Cash dividends paid                                          (244,264)
Comprehensive income, net of tax                   450      1,521,133
                                         -------------  -------------
BALANCE AT DECEMBER 31, 2005
   (NOTE 13)                             Ps     42,944  Ps 12,506,922
                                         =============  =============
</TABLE>

SEE ACCOMPANYING NOTES.

                                       F-6
<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, 2005)

<TABLE>
<CAPTION>
                                                                           YEARS ENDED DECEMBER 31,
                                                           -------------------------------------------------------
                                                                                                     (THOUSANDS OF
                                                                                                     U.S. DOLLARS)
                                                                                                       (NOTE 2)
                                                           -------------------------------------------------------
                                                               2003          2004          2005          2005
                                                           ------------  ------------  ------------  -------------
<S>                                                        <C>           <C>           <C>           <C>
OPERATING ACTIVITIES:
Net income                                                 Ps   586,375  Ps   730,181  PS 1,769,393   $    166,483
Adjustments to reconcile net income to resources
 provided by operating activities:
  Depreciation                                                  397,025       434,282       461,095         43,385
  Deferred income tax                                            71,709        83,631           989             93
  Goodwill amortization                                          18,192        18,106             -              -
  Labor obligations, net period cost                             10,630        20,440        37,517          3,530
                                                           ------------  ------------  ------------  -------------
                                                              1,083,931     1,286,640     2,268,994        213,491
Changes in operating assets and liabilities:
  Accounts receivable                                           (58,046)      114,099      (176,413)       (16,599)
  Inventories and biological assets                            (330,523)      (44,100)     (326,744)       (30,743)
  Prepaid expenses and other current assets                      96,545        29,448       (31,976)        (3,008)
  Accounts payable                                              147,840        17,120       (23,644)        (2,225)
  Related parties                                               (20,075)        3,600          (156)           (15)
  Taxes payable and other accruals                               29,138        15,250       127,775         12,023
  Labor obligations, plan contributions                          (8,121)       (8,835)      (24,220)        (2,279)
                                                           ------------  ------------  ------------  -------------
RESOURCES PROVIDED BY OPERATING
    ACTIVITIES                                                  940,689     1,413,222     1,813,616        170,645
                                                           ------------  ------------  ------------  -------------

FINANCING ACTIVITIES:
  Proceeds from issuance of long-term debt                       42,406         4,210           172             16
  Proceeds from issuance of notes payable to banks               79,784       321,256       163,391         15,374
  Repayment of long-term debt and notes payable                (165,769)     (303,489)     (191,150)       (17,985)
  Constant pesos effect on notes payable to banks and
     long term-debt                                              (8,255)       (8,095)       (5,738)          (540)
  Cash dividends paid                                          (331,572)     (255,307)     (244,264)       (22,983)
  Sales (repurchases) of Company's own stock, net                48,812       (11,610)       (7,907)          (745)
                                                           ------------  ------------  ------------  -------------
RESOURCES USED IN FINANCING
  ACTIVITIES                                                   (334,594)     (253,035)     (285,496)       (26,863)
                                                           ------------  ------------  ------------  -------------

INVESTING ACTIVITIES:
Acquisition of property, plant and equipment, net              (821,317)     (452,839)     (773,891)       (72,816)
Other assets                                                      4,100         3,006        (2,509)          (236)
                                                           ------------  ------------  ------------  -------------
RESOURCES USED IN INVESTING
  ACTIVITIES                                                   (817,217)     (449,833)     (776,400)       (73,052)
                                                           ------------  ------------  ------------  -------------

NET (DECREASE) INCREASE IN CASH
  AND CASH EQUIVALENTS                                         (211,122)      710,354       751,720         70,730
CASH AND CASH EQUIVALENTS AT
  BEGINNING OF YEAR                                           1,916,793     1,705,671     2,416,025        227,327
                                                           ------------  ------------  ------------  -------------
CASH AND CASH EQUIVALENTS AT
    END OF YEAR                                            Ps 1,705,671  Ps 2,416,025  Ps 3,167,745  $     298,057
                                                           ============  ============  ============  =============
</TABLE>

SEE ACCOMPANYING NOTES.

                                       F-7
<PAGE>

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

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                  YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005

                   (Thousands of constant Mexican pesos as of
                   December 31, 2005, 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
have represented 89% of net revenues for the years ended December 31, 2003, 2004
and 2005. 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 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 Company has no investments in
variable-interest entities. The ownership interests of other stockholders in
such subsidiaries are shown as minority interest. Intercompany balances,
investments and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements include the following
consolidated subsidiaries as of December 31, 2003, 2004 and 2005:

<TABLE>
<CAPTION>
                                                        PERCENTAGE EQUITY INTEREST
                                                        --------------------------
                                                          2003     2004     2005
                                                        -------- -------- --------
                                                           %        %         %
<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      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      100
Sepetec, S. A. de C.V                                        100      100      100
Servicios de Personal Administrativo, S.A. de C.V            100      100      100
</TABLE>

                                       F-8
<PAGE>

In November 2004, the Company acquired all the shares of Secba, S.A. de C.V.
from a related party for Ps 14,368. 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 341 was taken to 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. 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, 2005. The
December 31, 2005 restatement factor applied to the financial statements at
December 31, 2003 and 2004 was 1.0869 and 1.0333, which represent the rate of
inflation from December 31, 2003 and December 31, 2004 up to December 31, 2005,
respectively, based on the Mexican National Consumer Price Index (NCPI)
published by Banco de Mexico (the Central Bank).

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.

Depreciation of property, plant and equipment is computed on restated values
using the straight-line method, based on the estimated lives of the related
assets (see Note 5).

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.

                                       F-9
<PAGE>

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.

E) INVESTMENTS IN FINANCIAL INSTRUMENTS

Investments in financial instruments classified as "held to maturity" are valued
using the amortized-cost method. Investments classified as available for sale
are stated at market value. As of December 31 2005, the company does not have
this type of instruments.

On January 1, 2005, the Company adopted the requirements of Mexican accounting
Bulletin C-2, Financial Instruments, as amended, issued by the Mexican Institute
of Public Accountants. Bulletin C-2 requires that changes in the fair value of
instruments classified as available for sale be disclosed in stockholders'
equity until such time as the instruments are sold.

Those financial instruments with maturities of less than one year, as well as
the short-term portion (less than one year) of long-term financial instruments,
are to be classified separately in the balance sheet as current assets.

Also under Bulletin C-2, those changes associated with the purchase, sale and
maturity of financial instruments classified as available for sale are to be
recognized in the statement of changes in financial position as variances
derived from investing activities, while changes in the initial and ending
balance of instruments held for trading are to be recognized in the statement as
variances derived from operating activities.

Also, the Company follows the policy of determining at the balance sheet date
whether there is objective evidence of impairment in the value of a financial
asset or of a group of financial assets. Should there be objective and lasting
evidence of impairment in the value of either its instruments available for sale
or held to maturity, the Company is required to determine the amount of the
related loss and recognize such loss as part of the comprehensive financing
income (cost). At December 31, 2005, the Company has recorded no such impairment
loss.

For the year ended December 31, 2005, there were no transfers between financial
asset categories.

The adoption of this Bulletin C-2 did not have a material effect on the
Company's financial position or on its results of operations.

                                      F-10
<PAGE>

F) 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 36,301 and Ps 34,914 as of December 31,
2004 and 2005, respectively.

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

G) 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.

H) SENIORITY PREMIUMS AND TERMINATION BENEFITS

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 based on independent
actuarial computations using the projected unit-credit method and hypotheses net
of inflation.

Also, in accordance with Mexican labor law, the Company is contingently liable
for severance payments to employees who are unjustifiably dismissed.

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 contribution 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%.

The revised Mexican accounting Bulletin D-3, Labor Obligations, issued by the
Mexican Institute of Public Accountants, 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. Bulletin
D-3 also modified rules applicable to employee termination pay. The adoption of
Bulletin D-3 represented a charge to the 2005 results of operations of Ps.
16,342 (Ps. 11,603, net of taxes).

                                      F-11
<PAGE>

I)  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 latest 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
income, 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 and derivative
financial instruments.

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.

Asset tax is offset against deferred income tax, making the appropriate
evaluation of recovery.

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.

J)  REVENUE RECOGNITION

Revenue is recognized, 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

K)  NET INCOME PER UNIT

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

L)  COMPREHENSIVE INCOME

Comprehensive income consists of the net income or loss for the year, plus the
result from holding non-monetary assets, the effect of deferred taxes applied
directly to stockholders' equity, the effective portion of the unrealized gain
on valuation of cash flow hedges, the minimum liability adjustment for seniority
premiums and the effect of minority interest, as required by Mexican accounting
Bulletin B-4, Comprehensive Income.

                                      F-12
<PAGE>

M)  DERIVATIVE FINANCIAL INSTRUMENTS

In order to reduce its financial risks, the Company uses derivative financial
instruments, which at December 31, 2004, are valued using the same method as the
one used to value the assets and liabilities being hedged.

As of January 1, 2005, Mexican accounting Bulletin C-10, Accounting for
Derivative Instruments and Hedging Activities, issued by the Mexican Institute
of Public Accountants in April 2004; consequently, the Company has modified its
policy for valuing and recognizing derivatives. In the Company's balance sheet
at December 31, 2004 and 2005, all derivatives are presented at their fair
value, which initially consists of the acquisition cost (both for assets and
liabilities). Changes in the fair value of derivatives that do not qualify as
hedges are recognized in results of operations.

Derivatives designated as and that qualify as hedges are classified as either
fair value or cash flow, depending on the particular risk being mitigated.

In order for a financial derivative instrument to be considered a hedge, it must
be formally documented from the time it is contracted, evaluated from the
beginning and in its subsequent stages, and the effectiveness of the hedge must
be evaluated before the hedge is put to use and must be subsequently reliably
measured.

The formal documentation of the financial derivative instrument must include
information relating to the contract such as, the strategy and objective of the
risk management, justification of the transaction, the specific risk to be
covered, the primary position, the type of instrument (derivative or
non-derivative), the form of evaluating the effectiveness from the beginning
(prospective) and thereinafter (retrospective), as well as the treatment which
will be given to the gain or loss in measuring the effectiveness.

Combining options may be designated as a hedge from the time of inception,
provided the premiums (on a net basis) are actually settled or, if applicable,
the combination of premiums within the hedging strategy is equal to zero.

For fair value hedges, the gain or loss resulting from the valuation of the
instrument to its fair value is recognized immediately in earnings of the period
of change together with the offsetting loss or gain resulting form valuing and
adjusting to book value the hedged item attributable to the risk being hedged.

For cash flow hedges, the effective portion of the derivative's gain or loss is
initially reported as a component of other comprehensive income in stockholders'
equity while the ineffective portion of the gain or loss is reported in earnings
immediately. The stockholders' equity component included in the comprehensive
income item associated with the hedged transaction shall be adjusted to a
balance that reflects the lesser of the following (in absolute amounts): (i) the
cumulative gain or loss on the hedge instrument and (ii) the cumulative change
in the fair value of expected future cash flows from the hedged transaction from
the inception of the hedge. The hedge effectiveness of options is determined by
excluding the option's time value and recording such portion in results of
operations. If the hedged transaction results in the acquisition of an asset or
the incurrence of a liability, the gains and losses that were previously
recognized in stockholders' equity as comprehensive income shall be reclassified
into earnings in the same period or periods during which the asset acquired or
liability incurred affects earnings.

                                      F-13
<PAGE>

Amounts for cash flow hedges recognized in stockholders' equity as comprehensive
income shall be reclassified into earnings in the same period or periods during
which the hedged forecasted transaction or firm commitment affects earnings.

The Company determines and records the fair value of its options in its
financial statements based on the values provided by its counterparty.

The effectiveness of the Company's hedges is determined at the time the
derivatives are designated as hedges and is assessed on a regular basis. Hedges
considered as highly effective are those in which the fair value or cash flows
of the hedged item are offset on a period-by-period or cumulative basis by
changes in the fair value or cash flows of the derivative itself by a range of
80% and 125%.

The adoption of Bulletin C-10 gave rise to a decrease of Ps. 85,559, net of
taxes, in comprehensive income for the year ended December 31, 2005.

N)  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.

O)  GOODWILL

Goodwill represents the excess purchase price over the fair value of the net
assets acquired at the date of purchase.

Effective January 1, 2005, the Company adopted the requirements of Mexican
accounting Bulletin B-7, Business Acquisitions, issued by the Mexican Institute
of Public Accountants. As a result, the Company values all of its business
acquisitions using the purchase method and no longer amortizes its goodwill.
Through December 31, 2004, goodwill was being amortized using the straight-line
method over a period of twenty years.

The adoption of this accounting pronouncement gave rise to an increase in the
Company's net income at December 31, 2005 of Ps. 18,106 derived from the
proscription of amortization of goodwill.

Goodwill is recorded initially at acquisition cost and then restated based on
the NCPI. Goodwill is evaluated for impairment at the end of each year.

P)  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 12 for the Company's foreign currency position at the end of each year
and the exchange rates used to translate foreign currency denominated balances.

                                      F-14
<PAGE>

Q)  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 (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.

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.

R)  INTANGIBLE ASSETS

Intangible assets are amortized on restated values using the straight-line
method based on the estimated useful lives of the related assets. Intangible
assets with indefinite useful lives are not amortized.

The value of intangible assets with indefined useful lives is reviewed whenever
there are indications of impairment in their value. The related loss is
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 value in use. An
impairment loss is recognized if the net carrying amount of the asset exceeds
the recovery value.

                                      F-15
<PAGE>

Intangibles with definite useful lives that are not yet available for use and
intangibles that are in use but whose amortization period exceeds 20 years from
the date they were available for use are tested for impairment at the end of
each year.

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

Liability provisions are recognized whenever: (i) the Company has current
obligations (legal or assumed) derived from past events, (ii) the liability will
most likely give rise to a future cash disbursement for its settlement and (iii)
the liability can be reasonably estimated.

If the effect of the time value of money is material, provision amounts are
determined as the present value of the expected disbursements to settle the
obligation. The discount rate is determined on a pre-tax basis and reflects
current market conditions at the balance sheet date and, where appropriate, the
risks specific to the liability. Where discounting is used, the increase in the
provision due to the passage of time is recognized as an interest expense.

Contingent liabilities are recognized only when they will most likely give rise
to a future cash disbursement for their settlement. Also, commitments are only
recognized when they will generate a loss.

T)  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.

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 15. The financial
information related to clients is not disclosed, as such information is not
available.

U)  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.

                                      F-16
<PAGE>

V)  CONVENIENCE TRANSLATION

United States dollar amounts as of December 31, 2005, 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 10.628 to one U.S.
dollar, which was the exchange rate at December 31, 2005. 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.

W)  RECLASSIFICATIONS

Some amounts shown in the 2003 and 2004 financial statements have been
reclassified for uniformity of presentation with 2005.

X)  EFFECTS OF ADOPTING NEW ACCOUNTING PRONOUNCEMENTS

Had Mexican accounting Bulletins B-7 and C-10 been in force as of January 1,
2003, the effect on the statements of income would have been as follows:

<TABLE>
<CAPTION>
                                                                  2003               2004               2005
                                                            ----------------   ----------------   ----------------
<S>                                                         <C>                <C>                <C>
Net revenues                                                Ps    11,686,207   Ps    13,742,640   Ps    14,466,020
Cost of sales                                                     (9,506,646)       (11,145,172)       (10,405,775)
                                                            ----------------   ----------------   ----------------
Gross profit                                                       2,179,561          2,597,468          4,060,245
Selling, general and administrative expenses                      (1,683,969)        (1,693,128)        (1,857,593)
                                                            ----------------   ----------------   ----------------
Operating income proforma                                            495,592            904,340          2,202,652

Comprehensive financing income (cost)
Interest income                                             Ps       161,416   Ps        90,527   Ps       293,164
Interest expense                                                     (26,889)          (125,557)          (194,048)
Foreign exchange gain,                                                74,995             46,553            (57,666)
Loss on net monetary position                                        (80,406)          (100,106)          (109,966)
Other income (expense), net                                           24,299             31,894            (20,843)
                                                            ----------------   ----------------   ----------------
Income before income tax and asset tax, employee                     649,007            847,651          2,113,293
   profit  sharing and cumulative effect of change in
   accounting principle
Income tax and asset tax                                            (117,067)          (109,980)          (343,900)
Cumulative effect of change in accounting
   principle, net of taxes                                            73,463                  -                  -
                                                            ----------------   ----------------   ----------------
Net income proforma                                         Ps       605,403   Ps       737,671   Ps     1,769,393
                                                            ================   ================   ================
Weighted average units outstanding (in thousands)                    299,369            299,630            299,349
                                                            ----------------   ----------------   ----------------
Net majority income per unit                                Ps          2.02   Ps          2.46   Ps          5.91
                                                            ================   ================   ================

</TABLE>

                                      F-17
<PAGE>

3.  INVESTMENTS IN FINANCIAL INSTRUMENTS

The Company has entered into contracts with Banamex Citigroup, Merrill Lynch and
JP Morgan to secure future U.S. dollar exchange rates to be used in the
Company's projected cash expenditures for the period from January through
December 2006. Such contracts represent a long position of USD 180 million
(equal to 33% of Bachoco's estimated purchases for the year) at USD 11.10 per
peso. The contract establishes that Bachoco shall not have to pay the
counterparties a premium on the acquisition of these options since the
transactions were carried out under zero-cost options, whereby Bachoco buys and
sells options and premiums payable and receivable (respectively) are the same.

A summary of instruments that qualify as cash flow hedges as of December 31,
2004 and 2005 is as follows:

<TABLE>
<CAPTION>
            2004
    DERIVATIVES FINANCIAL                                             COMPREHENSIVE    TIME VALUE/
         INSTRUMENTS              TYPE      POSITION    FAIR VALUE        INCOME       NET PROFIT
------------------------------   -------   ----------   ----------    -------------    -----------
<S>                              <C>       <C>          <C>                     <C>    <C>
Exchange rate options            Put       Short        $   (9,029)              --    $    (9,029)
Exchange rate options            Put       Long             28,353               --         28,353
Exchange rate options            Call      Short           (25,679)              --        (25,679)
Exchange rate options            Call      Long             24,433               --         24,433
Corn futures                               Short            (1,334)              --         (1,334)
Corn bean and soy futures                  Long              1,677               --          1,677
Corn bean and soy futures        Put       Short            (1,341)              --         (1,341)
Corn options                     Call      Long                209               --            209
Peso futures                               Long              1,655               --          1,655
Peso futures                               Short            (1,152)              --         (1,152)
Peso options                     Put       Short              (467)              --           (467)
Peso options                     Put       Long                847               --            847
Peso options                     Call      Short            (3,463)              --         (3,463)
                                                        ----------    -------------    -----------
                                                        $   14,709               --    $    14,709
                                                        ==========    =============    ===========
</TABLE>

The Ps 14,709 gain is included in 2004 income statement as comprehensive
financing income.

                                      F-18
<PAGE>

<TABLE>
<CAPTION>
            2005
    DERIVATIVES FINANCIAL                                             COMPREHENSIVE    TIME VALUE/
         INSTRUMENTS              TYPE      POSITION    FAIR VALUE       INCOME        NET PROFIT
------------------------------   -------   ----------   ----------    -------------    -----------
<S>                              <C>       <C>          <C>           <C>              <C>
Exchange rate options            Call      Short        Ps  29,404    Ps     29,404    Ps        -
Exchange rate options            Call      Long            (47,669)         (47,669)             -
Exchange rate options            Put       Short           (98,606)         (98,606)             -
Exchange rate options            Put       Long             19,127           19,127              -
Bean and soy futures                       Short            (1,881)          (1,881)             -
Bean and soy futures                       Long                263              263              -
Corn futures                               Short                37               37              -
Corn futures                               Long               (299)            (299)             -
Bean and soy options             Call      Short               331              331              -
Bean and soy options             Call      Long                 40               40              -
Bean and soy options             Put       Short               (39)             (39)             -
Bean and soy options             Put       Long               (192)            (192)             -
Corn options                     Call      Short               (64)             (64)             -
Corn options                     Call      Long                237              237              -
Corn options                     Put       Short              (361)            (361)             -
Corn options                     Put       Long                 (3)              (3)             -
Peso future                                Short              (126)            (126)             -
Peso options                     Call      Short            (2,055)          (2,055)             -
Peso options                     Put       Short                (2)              (2)             -
Peso options                     Put       Long                  2                2              -
                                                        ----------    -------------    -----------
                                                        Ps(101,856)        (101,856)             -
Deferred tax effect                                                          16,297
                                                                      -------------    -----------
Total net of taxes recorded in conancing cost                         Ps    (85,559)   Ps        -
                                                                      =============    ===========
</TABLE>

As a part of its hedging strategy, the Company uses derivatives to offset the
risk associated with exchange rate fluctuations on its U.S. dollar denominated
transactions. The Company has entered into short-term hedges through "put" and
"call" options to cover its assets in the amount of $ 33,500 thousand in 2004
and $ 532,281 thousand in 2005, and its liabilities in the amount of $ 84,646
thousand and $ 708,733 thousand in 2004 and 2005, respectively. These contracts
represented a net (credit) debit of Ps.(41,696), Ps. 110,507 and Ps. 143,905 to
results of operations of 2003, 2004 and 2005, respectively, under the
Comprehensive cost of financing.

4.  INVENTORIES AND BIOLOGICAL ASSETS

a) Inventories consist of the following:

                                                    2004           2005
                                                ------------   ------------
  Raw materials and byproducts                  Ps   650,050   Ps   648,620
  Medicine, materials and spare parts                296,497        288,199
  Finished feed                                       31,731         33,031
                                                ------------   ------------
                                                     978,278        969,850
                                                ------------   ------------
Agricultural products:
  Live chicken                                       399,952        476,333
  Processed chicken                                  106,169        173,714
  Commercial egg                                      17,934         18,391
                                                ------------   ------------
                                                     524,055        668,438
                                                ------------   ------------
Total                                           Ps 1,502,333   Ps 1,638,288
                                                ============   ============

                                      F-19
<PAGE>

b) Biological assets at December 31, 2004 and 2005 consist of the following:

                                                    2004           2005
                                                ------------   ------------
Current biological assets:
   Breeder chicken                              Ps   105,068   Ps    96,400
   Breeder pigs                                       16,376         17,329
   Incubatable eggs for fattening                     55,708         52,464
                                                ------------   ------------
Total current biological assets                      177,152        166,193
                                                ------------   ------------

Non-current biological assets:
   Laying and breeder hens                            51,978         48,558
   Incubatable eggs for laying hens                    1,664          6,924
   Pigs                                               27,495         29,838
   Laying hens                                       449,388        474,685
   Allowance for productivity declines              (189,702)      (205,673)
                                                ------------   ------------
Total non-current biological assets                  340,823        354,332
                                                ------------   ------------
Total inventories and biological assets         Ps 2,020,308   Ps 2,158,813
                                                ============   ============

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 73,463 net
of taxes, which is presented in the consolidated statement of income as a
cumulative effect of accounting change.

The change in the historical value of biological assets and agricultural
products to be presented at their fair value was Ps. 64,050 in 2003 (increase),
Ps. 21,859 in 2004 (decrease) and Ps. 26,001 in 2005 (increase). In 2004 and
2005, the effects were included as part of the caption Net revenue. The initial
effect of adopting this bulletin in 2003 is presented separately in the
statement of income for that year.



5.  PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                         USEFUL
                                         LIVES
                                        (YEARS)           2004           2005
                                      ------------    ------------    ----------
<S>                                           <C>     <C>             <C>
Land                                             -    Ps   728,190    Ps   742,650
Buildings, farm structures and
 equipment                                    7-27      11,333,735      11,922,710
Office, furniture and equipment                  3         226,752         235,049
Transportation equipment                         6       1,102,336       1,137,819
                                                      ------------    ------------
                                                        13,391,013      14,038,228
Accumulated depreciation                                (5,086,182)     (5,457,078)
                                                      ------------    ------------
Net                                                      8,304,831       8,581,150
Construction in progress                                   197,340         233,817
                                                      ------------    ------------
Total                                                 Ps 8,502,171    Ps 8,814,967
                                                      ============    ============
</TABLE>

b) Depreciation expense for the years ended December 31, 2003, 2004 and 2005,
was Ps 397,025, Ps 434,282 and Ps 461,095, respectively.

                                      F-20
<PAGE>

6.  GOODWILL

In 1999, goodwill was derived from the purchase of the shares of Grupo Campi,
S.A. de C.V. in the amount of Ps. 340,053. At December 31, 2004 and 2005,
accumulated amortization aggregates Ps. 61,398. As mentioned in Note 2 o), in
2005, goodwill was not amortized derived from the adoption of Bulletin B-7,
Business Acquisitions.

Amortization expense charged to results of operations for the years ended
December 31, 2003 and 2004 was Ps. 18,192 and Ps. 18,106, respectively.

7.  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:

                                                    2004           2005
                                                ------------   ------------
Unsecured notes payable to banks:
Denominated in Mexican pesos, interest
  rate  2003 and 2004: CETES FIRA rate
  less 3.5 points                               Ps    36,528   Ps    36,850
Denominated in Mexican pesos, interest
  rate: TIIE FIRA rate less .75 points                41,333         35,000
                                                ------------   ------------
Total notes payable to bank                     Ps    77,861   Ps    71,850
                                                ============   ============

The weighted average interest rate on short-term notes payable at December 31,
2004 and 2005 was 7.10% and 6.87%, respectively. Average interest rates on
short-term debt for the years ended December 31, 2004 and 2005 were 4.93% and
7.74%, respectively.

                                                    2004           2005
                                                ------------   ------------
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    56,833   Ps    47,800
    Maturing in 2005, at interbank
    equilibrium (TIIE) rate plus 4 points
     or CETES rate plus 2Points                        4,254              -
    Maturing in 2007, fix rate of 10.45%              34,451         20,847

Unsecured:
     Maturing in 2005
     LIBOR rate plus 20%                                 415              -
     Denominated in Mexican pesos, at TIIE
     FIRA rate less 3.30 points, with
      minimum rate of 2.70%                            4,112          4,104
                                                ------------   ------------
Total                                                100,065         72,751
Less current portion                                 (25,113)       (20,837)
                                                ------------   ------------
Total long-term debt                            Ps    74,952   Ps    51,914
                                                ============   ============

Weighted average interest rates on long-term debt at December 31, 2004 and 2005
were approximately 10.31% and 9.89%, respectively. The weighted average interest
rate on the Company's total debt at December 31, 2004 and 2005 was 9.35% and
11.35%, respectively.

The weighted average interest rate of the Company's debt at December 31, 2004
and 2005 was 8.90% y 8.38%, respectively.

                                      F-21
<PAGE>

b) At December 31, 2004 and 2005, unused lines of credit totaled Ps 975,681 and
Ps 973,351, respectively. In 2003, 2004 and 2005, the Company did not pay any
fee for unused lines of credit.

c) The book value of assets collateralizing long-term debt was Ps 251,132 at
December 31, 2004 and Ps 235,230 at December 31, 2005.

d) Maturities of long-term debt as of December 31, 2005 are as follows:

                          YEAR                AMOUNT
                        --------           ------------
                          2007             Ps    17,705
                          2008                   10,065
                          2009                   11,855
                          2010                   12,289
                                           ------------
                                           Ps    51,914
                                           ============

8.  RELATED PARTIES

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

<TABLE>
<CAPTION>
                                                  RELATION         2004           2005
                                                ------------   ------------   ------------
<S>                                              <C>           <C>            <C>
Llantas y Accesorios, S.A. de C.V.               Affiliate     Ps        26   Ps        54
Maquinaria Agricola, S.A. de C.V.                Affiliate              117            118
Vimifos, S.A. de C.V.                            Affiliate            6,117          5,936
Autos y Accesorios, S.A. de C.V.                 Affiliate               53             49
                                                               ------------   ------------
                                                               Ps     6,313   Ps     6,157
                                                               ============   ============
</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, 2003, 2004 and 2005, the Company had the
following transactions with related parties:

<TABLE>
<CAPTION>
                                                    2003           2004           2005
                                                ------------   ------------   ------------
<S>                                             <C>            <C>            <C>
Airplane leasing expenses                       Ps     4,935   Ps     2,822   Ps     4,341
Purchases of vehicles, tires and spare parts          51,447         39,046         54,244
Purchases of feed, raw materials and
  packing supplies                                   166,477        202,524        179,738
Administrative services                              362,548              -              -
</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.

                                      F-22
<PAGE>

9.  OTHER TAXES PAYABLE AND OTHER ACCRUALS

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

                                                    2004           2005
                                                ------------   ------------
Expenses payable                                Ps   105,398   Ps   130,239
Interest payable                                       1,432          1,349
Tax payable                                            5,413          3,777
Salaries payable                                      17,088          2,993
Withholding taxes                                     18,689         17,684
Social security fees                                  21,696         27,837
Employee profit sharing                                3,766          3,773
Trade advances                                        17,090         60,225
Other accounts payable                                20,808         31,960
                                                ------------   ------------
Total                                           Ps   211,380   Ps   279,837
                                                ============   ============

10.  LABOR OBLIGATIONS

The analysis of the net period cost, the funded status and the assumptions
considered in the pension plan, the seniority premium obligation and retirement
pension plan at December 31, 2003, 2004 and 2005 is as follows:

<TABLE>
<CAPTION>
                                                  PENSION PLAN                         SENIORITY PREMIUM             DISMISSAL
                                      ------------------------------------    ------------------------------------   ----------
                                         2003         2004         2005          2003         2004         2005         2005
                                      ----------   ----------   ----------    ----------   ----------   ----------   ----------
<S>                                   <C>          <C>          <C>           <C>          <C>          <C>          <C>
Net period cost:
Labor cost                            Ps   3,704   Ps   9,098   Ps  10,002    Ps   2,591   Ps   3,030   Ps   3,053   Ps   8,469
Return on plan assets                     (1,321)      (5,339)      (6,826)           --           --           --           --
Amortization of past service
 costs                                       462        2,386        2,499         2,190        2,859        3,185        4,245
Interest cost                              1,460        6,609        7,323         1,544        1,797        1,936        1,738
                                      ----------   ----------   ----------    ----------   ----------   ----------   ----------

Net period cost                       Ps   4,305   Ps  12,754   Ps  12,998    Ps   6,325   Ps   7,686   Ps   8,174   Ps  14,452
                                      ==========   ==========   ==========    ==========   ==========   ==========   ==========
Loss from early
extinguishment of obligations         Ps       -   Ps       -   Ps       -    Ps       -   Ps       -   Ps       -   Ps   1,890
                                      ==========   ==========   ==========    ==========   ==========   ==========   ==========
</TABLE>

<TABLE>
<CAPTION>
                                                        PENSION PLAN                 SENIORITY PREMIUM           DISMISSAL
                                                ----------------------------    ----------------------------    ------------
                                                    2004            2005            2004            2005            2005
                                                ------------    ------------    ------------    ------------    ------------
<S>                                             <C>             <C>             <C>             <C>             <C>
LABOR OBLIGATIONS:
Accumulated benefit obligation                  Ps   120,856    Ps   131,499    Ps    29,401    Ps    32,011    Ps    36,014
                                                ------------    ------------    ------------    ------------    ------------
Current benefit obligation                            76,133          81,559          25,100          27,321          34,405

Projected benefit obligation                         135,221         141,120          37,446          43,113          39,523
Plan assets                                          (99,287)       (121,097)                              -               -
Unrecognized prior service cost                      (25,007)        (23,141)         (7,618)         (7,018)        (30,100)
Actuarial gains                                       21,108          34,088          (8,568)        (13,454)             50
Unrecognized changes or improvements                 (19,215)        (18,022)         (4,645)         (2,329)            -
                                                ------------    ------------    ------------    ------------    ------------
Net projected benefit obligation                      12,820          12,948          16,615          20,312           9,473
                                                ------------    ------------    ------------    ------------    ------------
Unfunded accumulated benefit obligation         Ps    23,519    Ps    12,509    Ps    29,401    Ps    32,011    Ps    36,014
                                                ------------    ------------    ------------    ------------    ------------
Current net liability over net projected
 liability in some subsidiaries                        3,265           3,753               -               -               -
                                                ------------    ------------    ------------    ------------    ------------
Additional liability                                  13,962           3,314          12,786          11,699          26,541
                                                ------------    ------------    ------------    ------------    ------------
Intangible assets                                    (13,962)         (3,314)        (11,740)         (9,123)         26,027
                                                ------------    ------------    ------------    ------------    ------------
Minimum labor obligation liability adjustment   Ps         -    Ps         -    Ps     1,046    Ps     2,576    Ps       514
                                                ============    ============    ============    ============    ============
</TABLE>

                                      F-23
<PAGE>


<TABLE>
<CAPTION>
                                                        PENSION PLAN                 SENIORITY PREMIUM           DISMISSAL
                                                ----------------------------    ----------------------------    ------------
                                                    2004            2005            2004            2005            2005
                                                ------------    ------------    ------------    ------------    ------------
<S>                                             <C>             <C>             <C>             <C>             <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year         Ps    27,108    Ps   135,221    Ps    33,226    Ps    37,446    Ps    36,136
Incorporation of the subsidiary Secba                100,353               -           3,243               -
                                                ------------    ------------    ------------    ------------    ------------
                                                     127,461         135,221          36,469          37,446          36,136
Service cost                                           9,099          10,002           3,030           3,053           8,469
Interest cost                                          6,609           7,323           1,797           1,936           1,738
Actuarial differences                                 (5,758)         (9,956)          1,705           5,154              50
Benefits paid                                         (2,190)         (1,470)         (5,555)         (4,476)         (6,870)
                                                ------------    ------------    ------------    ------------    ------------
Projected benefit obligation at end of year     Ps   135,221     Ps  141,120    Ps    37,446    Ps    43,113    Ps    39,523
                                                ============    ============    ============    ============    ============
</TABLE>

                                                       PENSION PLAN
                                                ---------------------------
                                                    2004           2005
                                                ------------   ------------
CHANGES IN PLAN ASSETS:
Fair value of plan assets at
 beginning of the year                          Ps    23,133   Ps    99,287
Plan assets at beginning of year                      57,287              -
                                                ------------   ------------
Incorporation of the subsidiary Secba                 80,420         99,287
Actual return on plan assets                           5,338          6,826
Employer contribution                                 14,501         12,873
Actuarial differences                                  1,218          3,581
Benefit paid                                          (2,190)        (1,470)
                                                ------------   ------------
Fair value of plan assets at end of year        Ps    99,287   Ps   121,097
                                                ============   ============
Funded status                                        (35,934)       (20,023)
Unrecognized net actuarial loss (gain)               (21,108)       (34,088)
Unrecognized prior service cost (benefit)             25,007         23,141
                                                ------------   ------------
Net amount recognized                           Ps   (32,035)  Ps   (30,970)
                                                ============   ============

        The Company used December 31, 2003, 2004 and 2005 measurement date for
        pension plan, seniority premium and dismissal, that latter applicable
        only in 2005.

        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 2003,
        2004 and 2005 and the target allocation for 2006 by asset category are
        as follows:

                                                                      TARGET
                                   PERCENTAGE OF PLAN AT YEAR END   ALLOCATION
                                   ------------------------------   ----------
                                    2003       2004       2005        2006
                                   --------   --------   --------   ----------
Fixed-income securities                  76%        79%        75%          80%
Fixed-variable income securities         24%        21%        25%          20%

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 2003, 2004 and 2005 are as
follows:

                                   2003        2004        2005
                                 --------    --------    --------
Labor obligations discount           5.25%       5.50%       5.25%
Future salary increases              1.50%       1.50%       1.00%
Return on assets                     6.00%       6.50%       6.25%

                                      F-24
<PAGE>

The information about the expected cash flow for the pension benefit plant and
seniority premium is as follows:

                                              PENSION       SENIORITY
                                                PLAN         PREMIUM
                                            ------------   ------------
Expected benefit payment:
        2006                                Ps     4,744   Ps     5,128
        2007                                       5,655          5,447
        2008                                       6,354          5,595
        2009                                       7,263          5,648
        2010                                       8,154          5,682
        2011-2015                                 54,862         28,736
                                            ------------   ------------
        Total                               Ps    87,032   Ps    56,236
                                            ============   ============

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:

                         YEAR ENDED
                        DECEMBER 31,          AMOUNT
                        ------------       ------------
                            2003           Ps    24,973
                            2004                 29,516
                            2005           Ps    30,714

b) Future minimum annual rental payments under existing operating leases with
initial terms in excess of one year as of December 31, 2005, are as follow:

                         YEAR ENDED
                        DECEMBER 31,          AMOUNT
                        ------------       ------------
                            2006           Ps    22,778
                            2007                 17,980
                            2008                 15,681
                            2009                 13,574
                            2010                 10,723
                          2011 and
                         thereafter               2,993
                                           ------------
                           Total           Ps    83,729
                                           ------------

                                      F-25
<PAGE>

12.  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)
                                                ---------------------------
                                                    2004           2005
                                                ------------   ------------
ASSETS:
  Cash and cash equivalents                     $     75,643   $     26,251
  Advances to suppliers (included in
   inventories and property, plant and
   equipment)                                         16,184         21,424
                                                ------------   ------------
                                                      91,827         47,675
LIABILITIES:
  Accounts payable                                    (7,875)        (6,415)
                                                      (7,875)        (6,415)
                                                ------------   ------------
NET LONG POSITION                               $     83,952   $     41,260
                                                ============   ============

b) As of December 31, 2004 and 2005, the exchange rate was Ps 11.175 and Ps
10.71 per dollar, respectively.

c) Assets from foreign origin included in the consolidated balance sheets as of
December 31, 2004 and 2005, were:

                                                 (THOUSANDS U.S. DOLLARS)
                                                ---------------------------
                                                    2004           2005
                                                ------------   ------------
Inventories                                     $     16,064   $     16,969
Property, plant and equipment                        128,685        140,109

d) Imported raw materials, in thousands of U.S. dollars, were $ 84,633 in 2003,
$ 115,245 in 2004 and $ 186,685 in 2005. Interest expense, in thousands of U.S.
dollars from debt denominated in U.S. dollars was $ 93 in 2003, $ 235 in 2004
and $ 5 in 2005.

13.  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.

b) In 2003, 2004 and 2005, the Company declared and paid cash dividends at
nominal values of Ps 297,738, Ps 238,935 and Ps 239,098, respectively (Ps
331,572, Ps 255,307 and Ps 244,264, in constant Mexican pesos) or Ps 0.99, Ps
0.80 and Ps 0.80, 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, 2004 and 2005, included in retained earnings, was Ps 190,558.

                                      F-26
<PAGE>

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 281,445 expressed in constant Mexican pesos) through
the appropriation of retained earnings in 1998. During 2003, 2004 and 2005, the
Company repurchased 300 thousand, 1,110 thousand and 460 thousand units for Ps
5,959, Ps 24,930 and Ps 10,849, respectively. In 2003, 2004 and 2005, the
Company sold 2,834 thousand, 710 thousand and 400 thousand of units,
respectively, previously repurchased; the sales value of latter was for Ps
54,772 Ps 13,319 and Ps 2,942, 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 2003 through 2005, pretax income of BSACV, represented between 90% 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) From 1999 through December 31, 2001, under Mexican income tax law, corporate
taxpayers were extended the option of deferring payment of a portion of their
annual corporate income tax, so that the tax payable will represent 30% of
taxable income. The earnings on which taxpayers opted to defer payment of a
portion of corporate income tax had to be controlled in the so-called "net
reinvested tax profit account" (CUFINRE).

Since the Company opted for this tax deferral, earnings will be considered to be
distributed first from the CUFINRE and any excess will be paid from the "net tax
profit account" balance ("CUFIN") so as to pay the 5% deferred tax. The option
to defer a portion of the annual corporate income tax was eliminated effective
January 1, 2002.

14.  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.

Taxpayers that were under the simplified regime in force through 2001, must
determine the total amount of earnings or losses of prior years on which taxes
need to be paid or the available tax carry forward at the date on which the new
law was enacted. Consequently, at January 1, 2002, the Company reported a tax
loss to be carried forward of Ps. 3,355,387. At December 31, 2005, this loss has
been utilized in full.

                                      F-27
<PAGE>

The corporate tax rates for 2003, were 34%. However, Companies engaged
exclusively in agriculture, cattle-raising, fishing, forestry and certain other
activities, have a 50% reduction in the tax payable through December 31, 2004.

In December 2004, a decrease in the 33% corporate income tax rate for 2004 was
approved so that the rate is 30% in 2005 and will be 29% in 2006 and 28% in 2007
and succeeding years. The effect of the decrease in tax rates represented a
credit to results of operations of Ps. 10,428 in 2004 and Ps. 26,030 in 2005.
Effective January 1, 2005, the tax rate for taxpayers that pay under the
simplified regime will be the result from applying the reduction of 46.67% in
2005, 44.83% in 2006 and 42.86% in 2007 to the new statutory rates for each year
(30%, 29% and 28%, respectively) giving rise to a 16% fixed rate after the
reduction.

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 of sales. Such change is
not applicable to BSACV, since the Company pays income tax under the simplified
regime.

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%. 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 2003, 2004 and 2005 amounted to Ps 13,948, Ps 13,172
and Ps 19,838, respectively. In each of the three years the Company credited
against these amounts the income tax paid in such years of Ps 12,237, Ps 11,045
and Ps 16,894, 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, 2005, the Company had Ps 10,826 in asset tax credits.

c) For the years ended December 31, 2003, 2004 and 2005, income tax charged
(credited) to results of operations was as follows:

                                    2003         2004         2005
                                 ----------   ----------   ----------
Current year income tax          Ps  41,705   Ps  21,146   Ps 336,765
Current year asset tax                1,711        2,127        2,944
Deferred income tax                  71,709       83,631          989
                                 ----------   ----------   ----------
Total income tax                 Ps 115,125   Ps 106,904   Ps 340,698
                                 ==========   ==========   ==========

                                      F-28
<PAGE>

The component of the Company's deferred income tax (assets) and liabilities are
as follows:

                                                    2004           2005
                                                ------------   ------------
Assets:
-------
Accounts payable                                Ps    80,786   Ps     1,040
Recoverable asset tax                                 72,691              -
Tax loss carry forward for  simplified
 regimen in force through December 31, 2001           35,952          8,466
                                                ------------   ------------
                                                     189,429          9,506
                                                ------------   ------------
Liabilities:
------------
Inventories                                          285,403        242,482
Accounts receivable                                   73,031          4,700
Fixed assets                                       1,181,229      1,144,863
Additional liability from stockholders' equity       387,029        311,834
                                                ------------   ------------
                                                   1,926,692      1,703,879
                                                ------------   ------------
Total deferred income tax liability, net        Ps 1,737,263   Ps 1,694,373
                                                ============   ============

At December 31, 2004 and 2005, the deferred income tax liability determined
after considering earned capital as an extraordinary item exceeds the liability
determined using the asset and liability method. Consequently, the Company
recorded an additional liability of Ps. 311,834 in 2005 (Ps. 387,029 in 2004) to
recognize the higher of the liability determined using the asset and liability
method and the liability determined after considering earned capital as an
extraordinary item exceeds .

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:

                                                  2003       2004        2005
                                                --------   --------    --------
                                                    %          %           %
Statutory income tax rate                          17.00      16.50       16.00
Effect of companies outside simplified regime        1.3        3.0         2.3
Effect of non-taxable book items                       -       (5.6)       (2.2)
Benefit derived from change in law effective
  in 2002 and changes in tax rate                      -       (1.2)          -
                                                --------   --------    --------
Effective income tax rate                           18.3       12.7        16.1
                                                ========   ========    ========

The effect of non-taxable book items is comprised basically of the effects of
inflation recognized in the financial statements and non-deductible expenses
considered permanent items.

d) At December 31, 2004 and 2005, the tax value of the Company's equity, which
will not be subject to taxation, is comprised of the following:

                                                    2004           2005
                                                ------------   ------------
Restated contributed capital (CUCA)             Ps 1,738,952   Ps 1,738,952
Net tax profit (CUFIN) and net reinvested
  tax profit (CUFINRE)                               325,745      1,507,274
                                                ------------   ------------
Total                                           Ps 2,064,697   Ps 3,246,226
                                                ============   ============

                                      F-29
<PAGE>

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.

15.  SEGMENTS

During 2003, 2004 and 2005, 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, 2003
                                                -----------------------------------------------
                                                   Poultry          Others           Total
                                                -------------    -------------    -------------
<S>                                             <C>              <C>              <C>
Net revenues                                    Ps 10,376,174    Ps  1,310,033    Ps 11,686,207
Cost of sales                                       8,320,836        1,185,810        9,506,646
Gross profit                                        2,055,338          124,223        2,179,561
Interest income                                       220,756          (52,506)         168,250
Interest expense and other financing
   costs                                              (22,951)          (3,938)         (26,889)
Loss on net monetary position                         (79,137)          (1,269)         (80,406)
Income tax and asset tax                              (92,802)         (22,323)        (115,125)
Majority net income                                   551,334           30,408          581,742
Property, plant and equipment, net                  8,065,673          417,941        8,483,614
Total assets                                       12,958,219          525,365       13,483,584
Total liabilities                                   2,399,983          148,929        2,548,912
Capital expenditures                                  821,317                -          821,317
Expenses not requiring cash
  disbursement:
  Depreciation                                        380,782           16,243          397,025
  Amortization of goodwill                             18,192                -           18,192
</TABLE>

<TABLE>
<CAPTION>
                                                As of and for the year ended December 31, 2004
                                                -----------------------------------------------
                                                   Poultry          Others           Total
                                                -------------    -------------    -------------
<S>                                             <C>              <C>              <C>
Net revenues                                    Ps 12,288,113    Ps  1,454,527    Ps 13,742,640
Cost of sales                                       9,799,664        1,345,508       11,145,172
Gross profit                                        2,488,449          109,019        2,597,468
Interest income                                       124,277          (19,041)         105,236
Interest expense and other financing
  costs                                              (121,745)          (3,812)        (125,557)
Loss on net monetary position                        (100,106)               -         (100,106)
Income tax and asset tax                              (77,829)         (29,075)        (106,904)
Majority net income                                   683,319           42,925          726,244
Property, plant and equipment, net                  8,296,740          205,431        8,502,171
Total assets                                       13,388,101          513,711       13,901,812
Total liabilities                                   2,527,523          136,329        2,663,852
Capital expenditures                                  452,839                -          452,839
Expenses not requiring cash
  disbursement:
    Depreciation                                      424,330            9,952          434,282
    Amortization of goodwill                           12,809            5,297           18,106
</TABLE>

                                      F-30
<PAGE>

<TABLE>
<CAPTION>
                                                As of and for the year ended December 31, 2005
                                                -----------------------------------------------
                                                   Poultry          Others           Total
                                                -------------    -------------    -------------
<S>                                             <C>              <C>              <C>
Net revenues                                    Ps 12,847,857    Ps  1,618,163    Ps 14,466,020
Cost of sales                                       9,022,388        1,383,387       10,405,775
Gross profit                                        3,825,469          234,776        4,060,245
Interest income                                       281,615           11,549          293,164
Interest expense and other financing
  costs                                              (193,702)            (346)        (194,048)
Loss on net monetary position                        (109,966)                         (109,966)
Income tax and asset tax                             (310,799)         (29,899)        (340,698)
Majority net income                                 1,695,118           72,623        1,767,741
Property, plant and equipment, net                  8,614,556          200,411        8,814,967
Total assets                                       14,668,000          643,401       15,311,401
Total liabilities                                   2,629,047          175,432        2,804,479
Capital expenditures                                  773,891                -          773,891
Expenses not requiring cash
  disbursement:
  Depreciation                                        453,293            7,802          461,095
</TABLE>

                        As of and for the year ended December 31, 2003
                        -----------------------------------------------
                           Chicken            Egg             Total
                        -------------    -------------    -------------
Net revenues            Ps  9,075,002    Ps  1,301,172    Ps 10,376,174

                        As of and for the year ended December 31, 2004
                        -----------------------------------------------
                           Chicken            Egg             Total
                        -------------    -------------    -------------
Net revenues            Ps 10,793,548    Ps  1,494,565    Ps 12,288,113

                        AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2005
                        -----------------------------------------------
                           CHICKEN            EGG             TOTAL
                        -------------    -------------    -------------
Net revenues            Ps 11,594,315    Ps  1,253,542    Ps 12,847,857

16. SUBSEQUENT EVENTS

On January 1, 2006, the requirements of the Mexican Financial Information
Standards Research and Development Board (Consejo Mexicano para la Investigacion
y Desarrollo de Normas de Informacion Financiera, A.C. or CINIF) went into
effect and replace the standards previously issued by the Mexican Institute of
Public Accountants. The adoption of these new rules will give rise to no changes
in the Company's financial structure or in the significant disclosures in its
financial statements.

                                      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 reconciliations 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, 2003, 2004 and
2005.

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 date of the
financial statements.

For U.S. GAAP purposes, 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 2003, 2004 and 2005; therefore, there is no difference
between Mexican and US GAAP in those years.

In addition, as described in Note 14, under Mexican labor law, the Company is
required to pay employee profit sharing. As of December 31, 2003, 2004 and 2005,
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 not 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 U.S. GAAP purposes was determined by reference to
the Companies average cost of outstanding debt and to construction progress
during the years presented.

MINORITY INTEREST

In conformity with Mexican GAAP, minority interest is included as a component of
stockholders' equity and is presented immediately after the caption total
majority stockholders' equity and minority interest in net income is not
eliminated from net income. For U.S. GAAP purposes, minority interest is
excluded from stockholders' equity and included as a separate caption. At
December 31, 2004 and 2005, minority interest aggregates Ps. 42,494 and Ps.
42,944, respectively. While minority interest shown in the statements of income
decreases to net income, for the years ended December 31, 2003, 2004 and 2005 of
Ps. 4,633, Ps. 3,937 and Ps. 1,652, 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, deferred taxes on the difference between
indexed cost and replacement cost and the effective portion of changes in the
market value of cash flow hedges, to be included in other comprehensive income.
The U.S. GAAP statements of changes in stockholders' equity include the
disclosure requirements of SFAS 130.

The result from holing non-monetary assets net of taxes, the minimum seniority
premium liability adjustment and the effective portion of changes in the value
of financial instruments are included in Other comprehensive income and at
December 31, 2005, these items aggregate Ps. (4,625,863), Ps. (3,090) and Ps.
(85,559), respectively, giving rise to a decrease in stockholders' equity.

                                      F-33
<PAGE>

DERIVATIVES FINANCIAL INSTRUMENTS

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. The
accounting treatment to be given financial instruments under Bulletin C-2 has
been substituted by the treatment established under Bulletin C-10 as from
January 1 2005.

SFAS No. 133, as amended "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.

The Company accounts for derivative financial instruments as described in Note 2
m under Mexican GAAP. Under US GAAP, the company complies with SFAS 133. For
both Mexican and US GAAP, the Company's derivatives at December 31, 2005
qualified for hedge accounting and therefore no differences existed for this
concept.

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.

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.

BUSINESS COMBINATIONS

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, for 2003 and 2004, goodwill was amortized using the
straight-line method over a period of 20 years. In 2003 and 2004, the
reconciliation shows the amount of goodwill amortization not performed for U.S.
GAAP purposes in the amount of Ps. 18,192 and Ps. 18,106, respectively.

Effective January 1, 2005, the Company adopted the requirements of Mexican
accounting Bulletin B-7, Business Acquisitions, issued by the Mexican Institute
of Public Accountants. Bulletin B-7 addresses the financial accounting and
reporting for business and entity acquisitions and requires that all business
combinations be accounted for using the purchase method. Since goodwill is no
longer amortized, it should be evaluated for impairment at the end of each year
As a result of the adoption of this Bulletin, the difference between Mexican
GAAP and U.S. GAAP has been eliminated.

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.

In conformity with U.S. GAAP, under SOP 85-3 biological assets and agricultural
products are to be valued at cost. Accordingly, the reconciliation between
Mexican GAAP and U.S. GAAP for 2003, 2004 and 2005 includes a reversal of the
unrealized (gain) loss on valuation of biological assets and agricultural
products at fair value, which gave rise to a charge (credit) of Ps. 64,050, Ps.
(21,859) and Ps. 26,001, the Company's biological assets and agricultural
products have been valued at their average production cost, which approximates
replacement cost, not in excess of net realizable value.

                                      F-35
<PAGE>

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 adoption of SFAS 151 had no material effect on the
Company's financial position or on its results of operations.

In May 2005, the FASB issued FAS 154, "Accounting changes and Error corrections"
which addresses the accounting and reporting for changes in accounting
principles. FAS 154 replaces APB 20 and FIN 20. The adoption of SFAS 154 had no
effect on the Company's financial position or on its results of operations.

In September 2005 The FASB issued FAS 155, "Accounting for Certain Hybrid
Financial Instruments"--an amendment of FASB Statements No. 133 and 140, that
amends FASB Statements No. 133, Accounting for Derivative Instruments and
Hedging Activities, and No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. This Statement resolves
issues addressed in Statement 133 Implementation Issue No. D1, "Application of
Statement 133 to Beneficial Interests in Securitized Financial Assets." The
adoption of SFAS 155 had no material effect on the Company's financial position
or 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.

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.

                                      F-36
<PAGE>

The Company has adopted, for its U.S. 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,
                                                -----------------------------------------------
                                                    2003             2004             2005
                                                -------------    -------------    -------------
<S>                                             <C>              <C>              <C>
OPERATING ACTIVITIES:
Net income                                      Ps    546,814    Ps    764,974    Ps  1,753,718
Adjustments to reconcile net income to
  net cash provided by operating activities:
Depreciation                                          398,769          436,502          463,748
Deferred income tax                                    68,416           90,923           (1,969)
Loss (gain) on net monetary position                   80,537          100,485          109,679
Labor obligations, net period cost                     10,630           20,440           37,517
                                                -------------    -------------    -------------
                                                    1,105,166        1,413,324        2,362,693
Changes in assets and liabilities:
Accounts receivable                                   (83,528)          65,150         (199,007)
Inventories and biological assets                    (459,725)        (311,933)        (558,851)
Prepaid expenses and other accounts
   receivable                                          91,765           26,260          (34,201)
Accounts payable                                      162,542           40,061           (8,934)
Related parties                                       (19,609)           3,832               49
Other taxes payable and other accruals                 35,464           42,060          137,104
Labor obligations, net                                (15,046)         (32,400)         (54,161)
                                                -------------    -------------    -------------
CASH FLOWS PROVIDED BY OPERATING
 ACTIVITIES                                           817,029        1,246,354        1,644,692

FINANCING ACTIVITIES:
Proceeds from issuance of notes payable               145,343          205,581          163,563
   to banks
Repayment of long-term debt and notes                (197,177)        (191,700)        (196,888)
   Payable
Cash dividends paid                                  (331,572)        (255,307)        (244,264)
Repurchase (sale) of stock                             48,812          (11,609)          (7,907)
                                                -------------    -------------    -------------
CASH FLOWS USED IN FINANCING ACTIVITIES              (334,594)        (253,035)        (285,496)

INVESTING ACTIVITIES:
Acquisition of property, plant and
   equipment                                         (830,829)        (461,494)        (785,277)
Other assets                                            4,100            3,006           (2,509)
                                                -------------    -------------    -------------
CASH FLOWS USED IN INVESTING ACTIVITIES              (826,729)        (458,488)        (787,786)
                                                -------------    -------------    -------------
EFFECT OF INFLATION ACCOUNTING                        133,172          175,523          180,310
                                                -------------    -------------    -------------
NET ( DECREASE ) INCREASE  IN CASH
      AND CASH EQUIVALENTS                           (211,122)         710,354          751,720
                                                -------------    -------------    -------------
CASH AND CASH EQUIVALENTS AT
   BEGINNING OF YEAR                                1,916,793        1,705,671        2,416,025
                                                -------------    -------------    -------------
CASH AND CASH EQUIVALENTS AT
   END OF YEAR                                  Ps  1,705,671    Ps  2,416,025    Ps  3,167,745
                                                =============    =============    =============

</TABLE>

                                      F-37
<PAGE>

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,
                                                -----------------------------------------------
                                                    2003             2004             2005
                                                -------------    -------------    -------------
<S>                                             <C>              <C>              <C>
Net income as reported under Mexican
  GAAP                                          Ps    586,375    Ps    730,181    Ps  1,769,393
Adjustments to reconcile net income to
  U.S. GAAP:
Interest cost capitalized                               9,512            8,655           11,386
Depreciation of capitalized interest                   (1,744)          (2,220)          (2,653)
Deferred income tax on US GAAP
  adjustments                                           3,293           (7,292)           2,958
Amortization of goodwill                               18,192           18,106                -
Effect of inflation accounting on
  U.S. GAAP adjustments                                  (131)            (378)             287
Biological assets and agricultural
  products valuation at fair value                    (64,050)          21,859          (26,001)
Minority interest                                      (4,633)          (3,937)          (1,652)
                                                -------------    -------------    -------------
Net income under U.S. GAAP                      Ps    546,814    Ps    764,974    Ps  1,753,718
                                                =============    =============    =============
Weighted average number of units
  outstanding (thousands)                             299,369          299,630          299,847
Net income per unit                             Ps       1.83    Ps       2.55    Ps       5.84
</TABLE>

After the foregoing adjustment for the depreciation of capitalized interest, the
reclassification of employee profit sharing, the non amortization of goodwill
(except for 2005) and biological assets and agricultural products valuation at
fair value operating income under U.S. GAAP would be Ps 420,186, Ps 916,810 and
Ps 2,170,796 in 2003, 2004 and 2005, respectively.

Total assets under U.S. GAAP were Ps 13,966,128 at December, 31 2004 and Ps
15,358,449 at December 31, 2005 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.

                                      F-38
<PAGE>

The reconciliation of the stockholders' equity between Mexican GAAP and US GAAP
is as follows:

<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31
                                                               ------------------------------
                                                                   2004             2005
                                                               -------------    -------------
<S>                                                            <C>              <C>
Majority stockholders' equity as reported under
  Mexican GAAP                                                 Ps 11,195,466    Ps 12,463,978
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                                                           61,698           73,084
Accumulated depreciation on the above items                           (9,577)         (12,230)
Deferred income taxes on U.S. GAAP adjustments                       (10,668)          (7,423)
Accumulated amortization of goodwill                                  54,385           54,385
Biological assets and agricultural products valuation
  at fair value                                                      (42,190)         (68,191)
                                                               -------------    -------------
Majority stockholders' equity as reported under U S
  GAAP                                                         Ps 11,249,114    Ps 12,503,603
                                                               =============    =============
</TABLE>

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
                                                                              PAID            REPURCHASE         RETAINED
                                                         CAPITAL STOCK      IN-CAPITAL         RESERVE           EARNINGS
                                                        --------------    --------------    --------------    --------------
<S>                                                     <C>               <C>               <C>               <C>
Balance at December 31, 2002                            Ps   2,124,234    Ps     603,630    Ps     188,441    Ps  12,038,152
Repurchase of stock                                               (164)                -            (5,795)
Sales of repurchased stock                                       1,570            53,202                 -                 -
Cash dividends paid                                                  -                 -                 -          (331,572)
Comprehensive income:
  Net income for the year                                            -                 -                 -           546,814
  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                                 2,125,640           656,832           182,646        12,253,394
Repurchase of stock                                               (592)                -           (24,338)                -
Sales of repurchased stock                                         380            12,939                 -
Cash dividends paid                                                  -                 -                 -          (255,307)
Comprehensive income:
  Net income for the year                                            -                 -                 -           764,974
  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                                 2,125,428           669,771           158,308        12,763,061
Repurchase of stock                                               (233)                            (10,616)
Sales of repurchased stock                                         206             2,736                 -                 -
Cash dividends paid                                                  -                 -                 -          (244,264)
Comprehensive income:                                                -                 -                 -
  Net income for the year                                            -                 -                 -         1,753,718
  Components of other comprehensive income:                          -                 -                 -                 -
   Deficit from holding of non monetary assets                       -                 -                 -                 -
   Derivative financial instruments                                  -                 -                 -                 -
   Minimum labor obligations liability
   adjustment                                                                          -                 -                 -

Other comprehensive income, net of taxes                                               -                 -                 -

Comprehensive income                                                                   -                 -                 -
                                                        --------------    --------------    --------------    --------------
BALANCE AT DECEMBER 31, 2005                            Ps   2,125,401    Ps     672,507    Ps     147,692    Ps  14,272,515
                                                        ==============    ==============    ==============    ==============

<CAPTION>

                                                            OTHER                               TOTAL
                                                         COMPREHENSIVE     COMPREHENSIVE     STOCKHOLDERS
                                                            INCOME            INCOME            EQUITY
                                                        --------------    --------------    --------------
<S>                                                     <C>               <C>               <C>
Balance at December 31, 2002                            Ps  (4,243,634)                -    Ps  10,710,823
Repurchase of stock                                                  -                 -            (5,959)
Sales of repurchased stock                                           -                 -            54,772
Cash dividends paid                                                  -                 -          (331,572)
Comprehensive income:
  Net income for the year                                            -    Ps     546,814           546,814
  Components of other comprehensive income:
     Deficit from  holding  of  non  monetary assets           (69,044)          (69,044)          (69,044)
Minimum seniority premium liability adjustment                  (1,200)           (1,200)           (1,200)
                                                                          --------------
Other comprehensive income, net of taxes                             -           (70,244)                -
                                                                          --------------
Comprehensive income                                                 -           476,570                 -
                                                        --------------    ==============    --------------
Balance at December 31, 2003                                (4,313,878)                -        10,904,634
Repurchase of stock                                                  -                 -           (24,930)
Sales of repurchased stock                                           -                 -            13,319
Cash dividends paid                                                  -                 -          (255,307)
Comprehensive income:
  Net income for the year                                            -           764,974           764,974
  Components of other comprehensive income:
    Deficit from holding of non monetary assets               (154,502)         (154,502)         (154,502)
Minimum seniority premium liability adjustment                     926               926               926
Other comprehensive income, net of taxes                             -          (153,576)                -
                                                                          --------------
Comprehensive income                                                 -           611,398                 -
                                                        --------------    ==============    --------------
Balance at December 31, 2004                                (4,467,454)                -        11,249,114
Repurchase of stock                                                   -                            (10,849)
Sales of repurchased stock                                                                           2,942
Cash dividends paid                                                                               (244,264)
Comprehensive income:
  Net income for the year                                                      1,753,718         1,753,718
  Components of other comprehensive income:
   Deficit from holding of non monetary assets                (159,455)         (159,455)         (159,455)
   Derivative financial instruments                            (85,559)          (85,559)          (85,559)
   Minimum labor obligations liability
   adjustment                                                   (2,044)           (2,044)           (2,044)
Other comprehensive income, net of taxes                                        (247,058)
                                                                          ==============
Comprehensive income                                                      Ps   1,506,660
                                                        --------------    --------------    --------------
BALANCE AT DECEMBER 31, 2005                            Ps  (4,714,512)                     Ps  12,503,603
                                                        ==============                      ==============
</TABLE>

                                      F-40
<PAGE>

INDEX OF EXHIBITS

Documents filed as exhibits to this Annual Report:

 EXHIBIT NO.                                DESCRIPTION
------------        ------------------------------------------------------------
     1.1            Bylaws (estatutos sociales) of Industrias Bachoco, S.A. de
                    C.V. dated December 9, 2003, together with an English
                    translation (incorporated by reference to Exhibit 1.1 on our
                    Form 20-F filed with the U.S. Securities and Exchange
                    Commission on June 29, 2004).

     2.1            Form of Deposit Agreement, among Industrias Bachoco, S.A. de
                    C.V., the Depositary and holders from time to time of
                    American Depositary Receipts issued thereunder, including
                    the form of American Depositary Receipt (incorporated by
                    reference on our registration statement on Form F-1 filed
                    with the U.S. Securities and Exchange Commission on August
                    22, 1997 (File No. 333-7472)).

     2.2            Trust Agreement, dated April 1, 1995, among Banco
                    Internacional, S.A., Institucion de Banca Multiple, Grupo
                    Financiero Prime Internacional, as trustee, and the
                    stockholders of the Company named therein, together with an
                    English translation, (incorporated by reference on our
                    registration statement on Form F-1 filed with the U.S.
                    Securities and Exchange Commission on August 22, 1997 (File
                    No. 333-7472)).

     2.3            Trust Agreement, dated August 20, 1997, among Banco
                    Internacional, S.A., Institucion de Banca Multiple, Grupo
                    Financiero Bital, as trustee, and the stockholders of the
                    Company named therein, together with an English translation,
                    (incorporated by reference on our registration statement on
                    Form F-1 filed with the U.S. Securities and Exchange
                    Commission on August 22, 1997 (File No. 333-7472)).

     8.1            Subsidiaries of Industrias Bachoco S.A. de C.V.

    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.