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Mexican Industry Copes With Recession

04 February 2010

MEXICO - The beef sector in Mexico is coping with the recession somewhat better than expected. However the dairy industry, consisting of smaller, back-yard dairy producers, is struggling despite milk yields increasing.

In Mexico Agribusiness Report for Q1 2010, Research and Markets looks at how Mexico's agricultural sector is faring moving into 2010. It appears that the dry weather through last summer will not have too drastic an effect for grain production in most of the country. While production of corn, Mexico's staple food and most significant grain crop, will be down from the previous year owing to a fall in yields, the damage will not be too severe. Production of Mexico's other major grain crops, wheat and sorghum, looks to be largely unaffected.

The livestock sector in Mexico is coping with the recession somewhat better than expected. The report estimates beef and poultry production to have shown positive growth in 2009, even if it was some what anaemic at an estimated 2.0 per cent and 1.6 per cent year-on-year (y-o-y), respectively. Similar levels of growth in 2010 are forecast as operators continue to keep expansion plans on hold owing to high debt levels and tight credit conditions.

The pork sector recovered quickly from April's H1N1 epidemic. Pork production for 2009 is now estimated to have fallen by only 0.6 per cent y-o-y. This is an impressive result given the falls in production in the middle of the year following the flu scare. Pork consumption has also recovered quickly, helped by the low price for pork after the outbreak which drew in value-conscious consumers in a recession year. The recovery from what at first looked to be a major blow to the sector was greatly helped by prompt government action to allay fears about the health risks of pork consumption and to provide aid to farmers hit by the crisis. In 2010, the forecast is for pork production to return to positive growth.

The dairy sector performed less well, and we now estimate milk production to have fallen slightly in 2009. Mexico's dairy sector continues to lag well behind that of its giant northern neighbour in terms of efficiency. In 2008, in the US milk production per cow was 9.28 tonnes, almost double the figure in Mexico. Things have been improving in recent years, from 1998 to 2008, milk yields per head of dairy cattle rose from 3.8 tonnes to 4.5 tonnes. This is largely down to the proliferation of modern, specialised dairy farms where yields are similar to those on farms in the southern United States. Yet much of Mexico's dairy production still comes from small, back-yard dairy producers and mixed use beef and dairy farms where milk yields are far lower than in specialised dairy farms. Beyond the current economic downturn, there will be more investment in modern dairy farms. This will see the centre of the country's dairy sector move northwards as investment concentrates on northern states such as Durango, Chihuahua and Coahuila.

Further Reading

- You can view the full report (fee payable) by clicking here.

TheCattleSite News Desk



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