Mexico. Fresh Deciduous Fruit Annual. Nov 2014 Nov. 11, 2014
Apple production in Mexico for marketing year (MY) 2014/15 (August/July) is forecast at 670,000 metric tons (MT), a smaller crop compared to the MY 2013/14 record crop of 860,000 MT. Total pear imports are forecast to remain strong for MY 2014/15 (July/June) or about 90,400 MT. Total Mexican table grape production for MY 2014/15 (May/April) is forecast at 261,000 MT, nearly the same as the prior year, despite an early start for Sonora. Grape exports are expected to increase to about 152,000 MT for MY 2014/15. The United States remains the major supplier of deciduous fruits to Mexico.
Apple production in Mexico for MY 2014/15 (August/July) is forecast at 670,000 metric tons (MT), a smaller crop than the bumper crop of MY 2013/14 because apple trees bear smaller crops after a large crop year. Official estimates are slightly higher at about 700,000 MT. Some late frosts in Chihuahua affected flowering during April 2014, but it is still considered a good production year. Average yields are forecast at about 11 MT/hectare (Ha). The state of Chihuahua, the main apple producing state, is expected to have a shorter crop of about 535,000 MT for MY 2014/15. The state of Durango, the second-largest producing state, is also expected to have a decrease for MY 2014/15 and production is estimated at 63,800 MT. The state of Coahuila, the third-ranked apple producing state, is expected to go back to an average of 36,600 MT for MY 2014/15. The state of Puebla, the fourth-largest apple producing state is expected to have 33,000 MT of apple production. Yields in Chihuahua are usually the highest in the country and average between 15-20 MT/ha or more for well-tended orchards.
The New/Post apple production estimate for MY 2013/14 was revised upward from previous estimates to 860,000 MT as Chihuahua had a bumper crop due to better weather conditions, having experienced lower crops in the past two years due mainly to dry weather issues. All the other producing states also saw their production increase. The national average yield for MY 2013/14 is estimated at 14.5 MT/Ha. The New/Post apple production data for MY 2012/13 remain unchanged from previous estimates.
New/Post total area planted for MY 2014/15 is forecast to increase marginally from New/Post MY 2013/14 area as increases in some states are offset by decreases in other areas. New/Post planted and harvested areas for MY 2013/14 were updated based on official estimates from SAGARPA/SIAP (Servicio de Informacion Agroalimentaria y Pesquera/Secretaria de Agricultura, Ganaderia, Desarrollo Rural Pesca y Alimentacion). New/Post area planted for MY 2012/13 remains unchanged from previous estimates while area harvested was revised marginally downward from previous estimates based on official data. The state of Chihuahua accounts for 45 percent of total area planted in Mexico. Durango accounts for 16 percent and Puebla accounts for 14 percent of planted area, approximately. Growers indicated that Mexico’s planted area is not expected to expand much due to higher costs of production, limited credit availability, water scarcity, and limited marketing expansion. Mexico’s main harvest season is between August and October.
New crop Gala and Golden Supreme varieties from Chihuahua enter the market in mid-August. Near the end of August, the Red Delicious apple harvest starts. Rome Beauty apples are usually harvested in early October and all harvest in the state of Chihuahua is completed by the end of October. Producers in Chihuahua generally use more advanced production technology than other states, resulting in higher-quality apples. Industry sources report that large-scale and technologically sophisticated growers in Chihuahua are renewing old orchards and planting with greater tree densities. There is also more investment in cold storage facilities using controlled atmosphere technology, and hail protection. According to growers, more than 50 percent of the apple area in Chihuahua has irrigation infrastructure, via sprinklers, micro sprinklers, and drip irrigation.
In order to remain competitive, producers in Chihuahua continue replacing a number of older orchards with higher yielding (about 80 MT/ha) and higher density apple trees (1,000 trees/ha or more). Although, MY 2013/14 was not a good year in terms of prices and sales, it forced some producers to sell at low prices or to let fruit rot on the tree due to a bumper crop. The area is expected to continue more or less the same. According to data, almost 43 percent of the area in Mexico is planted with the Golden Delicious variety and 34 percent with the Red Delicious variety. For the state of Chihuahua, almost 60 percent of the area is planted with the Golden Delicious variety and 34 percent with the Red Delicious variety. The Gala variety comprises about five percent of the total Chihuahua planted area but continues to gain ground. High-density varieties account for approximately 30 percent of Chihuahua’s planted area. The remainder of the apple producing area is planted at more traditional spacing of 350-400 trees per hectare. Most areas in Chihuahua and Durango are irrigated.
Costs of production typically range from U.S. $0.19 to $0.22 per kilogram. Production costs will tend towards the higher end of the estimate (or surpass it) if growers have frost protection equipment and new irrigation systems. According to producers, electricity, fuel, and packing costs (the last of which depend on foreign inputs like imported boxes and wax cartons), continue to rise compared to previous years. Recently, energy tariffs for cold storage skyrocketed and producers requested and were approved to be charged as an agricultural activity in order to receive preferential energy rates.
According to the National Service of Market Information (SNIIM), wholesale prices during MY 2013/14 were lower compared to prices in 2012/13 due to abundant supplies. Growers are expecting that prices for MY 2014/15 rise and have more opportunity in the market as the domestic growers are calling for an antidumping investigation against U.S. product (See Policy Section). Wholesale domestic Golden Delicious apples were 10 percent lower in September 2014 or about US$1.45 per Kg (MX$19.21 /Kg), while in September 2013 prices were on average US$1.57 per kg (MX$20.54/kg). Domestic Red Delicious apple prices were 5 percent higher in September 2014 or about US$1.41 per kg (MX$18.68/kg) while in September 2013 prices were on average US$1.35 (MX$17.73/kg). It seems that prices will continue at the same level, unless the Mexican government decides to begin the antidumping investigation.
According to data New/Post domestic consumption for MY 2014/15 is forecast at 819,730 MT of apples, however, this estimate could change if the Mexican government decides to go ahead with the antidumping investigation and to apply import duties on U.S. apples. New/Post apple consumption estimates for MY 2013/14 were revised upward due to a good demand at lower prices. However, according to local growers, the oversupply caused domestic problems, as the domestic crop struggled to find a market and there was economic loss. It seems that about 80,000 MT of apples from Chihuahua could not be commercialized, and that apples had to be sold at $1.00 peso/Kg (US$0.7/kg) when costs were above U.S. $0.19/Kg. Therefore, real domestic consumption data for MY 2013/14 is difficult to calculate. Wholesale prices for imported Red Delicious apples during MY 2013/14 began at about $22 pesos/kg (US$1.72/Kg) from August/December 2013 and continued to increase to about $24/Kg (US$1.82/kg) from January/July 2014. Wholesale domestic Red Delicious prices during the bumper crop were about 32 percent lower compared to 2012 or $18.34/Kg (US$1.43/Kg) from August/December 2013 and continued to be low for January/July 2014 at about $17.56/Kg (US$1.33/Kg). New/Post apple consumption estimates for MY 2012/13 were revised downward from previous estimates due to a slightly lower demand.
Estimates for apple imports for MY 2014/15 are forecast to be higher compared to MY 2013/14 imports; however, depending on the Mexican government’s decision on the antidumping petition from growers from Chihuahua, the United States’ export volume could change. New/Post apple imports for MY 2013/14 were revised downwards from previous estimates due to shorter supplies available from the international market and larger domestic supplies. Domestic apple producers indicate, however, that there was not an opportunity to place their crop in the local market due to the large volume of U.S. apples that were already in the market and a short capacity for cold storage.
According to data, more than 65 percent of apples are imported into Mexico during the months of January/July. Traders indicate that demand will still be strong as end consumers are used to having apples year round. As usual, most imports will come from the United States’ west coast. New/Post estimates for apple imports for MY 2012/13 remain unchanged from the previous estimate.
More than 90 percent of Mexico’s apple imports originate from the United States and it is expected that this trend will continue. Washington-origin apples account for 85 percent of U.S. exports to Mexico, with California, Michigan, and Virginia supplying the remainder. U.S. Red and Golden Delicious varieties continue to account for the bulk of U.S. apples exported to Mexico, however, the Gala variety is also becoming important. Apple varieties like Rome Beauty, Jonagold, and Pink Lady are being imported at much smaller quantities, based on consumer preferences. While Mexican consumers like the size and color of U.S. apples, Mexican apples are considered sweeter. The U.S. apple industry will continue to face competition in Mexico from other countries such as Chile and Canada.
Mexican apple exports are almost residual and Belize has been the main importer for the last few years. Belize imported 210 MT during MY 2011/12 and 226 MT during MY 2012/13. Mexico has not exported apples to the United States since 2012, but if it does the apples would have to come from a limited number of counties in the state of Chihuahua recognized as fruit fly free counties by APHIS.
The NAFTA tariffs for U.S. and Canadian apples were completely lifted on January 1, 2003, bringing the duty to zero. Under the Chile-Mexico Free Trade Agreement, imported Chilean apples began to enter duty free as of January 1, 2006. Apples from other countries are subject to a 20 percent duty. The Mexican government has established protocols and agreements with the Chinese government and initial test shipments have begun. Among the products to be imported from China are fruits and vegetables, including apples. The domestic industry does not anticipate significant competition since the apple variety from China, Fuji, is still not widely accepted by domestic consumers.
Antidumping Petition against the United States
The Regional Fruit Producers Association from the State of Chihuahua (UNIFRUT) requested an antidumping investigation against the producers and exporters of apples from the United States because they believe that U.S. apples were sold in Mexico below the cost of production in detriment to the growers in Chihuahua. The lawsuit was delivered to the Secretariat of Economy (SE) in the last week of August 2014. An answer is expected from SE during the month of November 2014, and UNIFRUT is expecting a positive answer to prevent a repeat of the previous year’s difficulty of finding a market and good prices in MY 2014/15. SE’s decision, whether it decides there was or was not dumping, will affect prices and trade volumes. As of the writing of this report, there has been no news from SE. Due to this issue, consumption and trade estimates are harder to forecast.
Mexico continues to be the number one export market for U.S. apples with 10,537,036 boxes shipped to Mexico during MY 2013/14, representing 27 percent of all U.S. apple exports. This is a 23 percent decrease from the record exports in MY 2012/13 and reflects the smaller Washington State crop and the bumper crop of Chihuahua Golden Delicious in Mexico. In fact, total exports of Washington Golden Delicious to Mexico decreased by 38 percent and were at their lowest level in five years.
Four varieties continue to dominate the Mexican market totaling 98 percent of the imported volume: 44 percent Red Delicious, 26 percent Golden Delicious, 23 percent Gala, 5 percent Granny Smith, less than 1 percent Fuji, and 1 percent other varieties. Mexican consumers prefer the Red and Golden Delicious varieties and have developed a strong preference for the Gala variety.
The United States remains the primary supplier of imported apples into Mexico. In MY2013/14, 97 percent of Mexico’s apple imports were from the United States; 2.22 percent from Chile; 0.3 percent from China; 0.24 percent from Canada; and 0.16 percent from New Zealand. If conditions are right, Argentinian and South African apples may also be present in the market, although they are unlikely to take market share away from U.S. apples.
Strong U.S. apple import months are from January to May, although the United States starts shipping in smaller volumes in November and continues to have a presence from June through October. Canadian apples are imported from November to January and Chilean apples are typically imported from March to June. Chilean apples do not compete directly with Mexican apples since they do not enter the market at the height of Mexico’s marketing year. Mexican apples are marketed from September through December, but many are kept in cold storage to be used during the early months of the year thus competing more directly with U.S. apples.
Mexico’s pear production is relatively low so SAGARPA only publishes pear production data on an annual basis. Although pear production for MY 2014/15 has not been published yet, New/Post total pear production is forecast at about 25,000 MT for MY 2014/15 (July/June) - a 3 percent increase from MY 2013/14 due to expected good weather conditions. Pear production is not expected to show significant increases in the near future, as growers are not heavily investing in this crop due to the high cost of production. New/Post pear production for MY 2013/14 was revised slightly downward from previous estimates based on official data. Pear yields for MY 2013/14 increased to 5.8 MT/Ha from 5.2 MT/Ha that prevailed in MY 2012/13. Pear production for MY 2012/13 remains unchanged from previous estimates.
Approximately 87 percent of the pear planted area is rain fed. Michoacán, Puebla, and Morelos are Mexico’s major pear producing states and account for 84 percent of total Mexican production. Lack of investment, high costs of production, scarce water supplies in pear producing regions, and disease problems have limited domestic production growth. However, some growers have started to experiment with planting more disease-resistant and longer shelf-life varieties. Area planted and harvested for MY 2014/15 is not expected to change much from the previous year. Planted area for MY 2013/14 remains unchanged from previous estimates, while area harvested was revised upward according to official data from SAGARPA/SIAP. Planted area for MY 2011/12 was revised marginally upwards while harvested area was revised downwards.
Domestic demand is satisfied mainly by imports from the United States, which represent about 78 percent of total supply. Pear consumption for MY 2014/15 is expected to have a slight increase over MY 2013/14 consumption due to higher demand. However, the recent modification in the Peso exchange rate could increase imported pear prices and thus consumers’ demand might decrease. New/Post pear consumption for MY 2013/14 increased over previous estimates due to a better demand and good pear prices. New/Post pear consumption for MY 2012/13 was revised slightly downward due to higher consumer prices. Consumers have the advantage that pears mainly from Oregon and Washington states are available year round.
Pear imports for MY 2014/15 are forecast to be slightly higher than imports in MY 2013/14 as the U.S. crop is expected to be of similar size compared to the previous year and demand is expected to be good. However for MY 2014/15, pears are expected to be of smaller sizes and a fancier grade than the previous year. New/Post pear import estimates for MY 2013/14 were revised slightly upward from previous estimates due to good demand, as prices were very low and pears were bigger than usual. New/Post pear import estimates for MY 2012/13 were revised downward from previous estimates, due to lower U.S. supplies at higher prices. Pear imports have been increasing as the retaliation tariff of 10 percent on U.S. imported pears was cancelled on October 14, 2011.
The U.S. Anjou pear import season is from September to July, although cold storage facilities in Mexico and the United States provide year-round availability. The U.S. Bartlett pear import season is from August through February, again with cold storage facilitating year-round availability. The presence of Chilean and Argentinean pears is limited in the Mexican market and they are of fair to good quality and are usually priced lower than U.S. pears. Under different trade agreements, the import duty on pears from the United States, Chile, and Argentina is zero. China has been exporting pears to the Mexican market but volumes are not significant.
Mexican pear exports are residual and Belize has been the principle importer for the last few years. Belize imported 27 MT during MY 2012/13 and 29 MT during MY 2013/14.
The United States is by far the largest and most important supplier of imported pears in Mexico, with a market share of 95 percent, followed by Argentina with 4 percent, Chile with 1 percent and China with the remaining 0.3 percent. For 2013 per capita consumption was about 2 lbs.
U.S. Anjou pears were priced ranging from U.S. $25.09 in February 2014 and U.S. $37.09 in June 2014 per 18-kg box. Prices were higher in MY 2012/2013 compared to prices in MY 2013/2014 of U.S. $17.44 in January 2014 and about U.S. $31.3 18-kg box in June 2014. Anjou pears continue to be the most sought after variety in the market followed by Bosc, Bartlett, and the Red Anjou varieties.
In MY 2013/14 Mexico became more of a multi-variety market with Anjou exports to Mexico reached 3.16 million boxes, followed by Bosc with 199,255 boxes, Bartlett with 154,481 boxes, Red Anjou with 39,187 boxes, Comice with 37,175 boxes, and other Reds, Seckel and Concorde varieties with 13,996 boxes. The suspension of the retaliation import duty has benefited volume imports for USA Pears.
Due to limited scales of production, Mexican pears are sold, almost exclusively, through local markets with very few sold in supermarkets. The most popular Mexican pear varieties among Mexican consumers are the Kiefer variety - better known as Pera Piña, and the Paraiso variety.
In-store promotions for pears have always been popular with the trade, helping them to increase sales and teaching consumers about important aspects of the fruit, such as origin, the main characteristics of the different pear varieties, as well as pears’ nutritional attributes and health benefits.
It is important to highlight that MY 2013/14 had different challenges, such as being a larger crop compared to MY 2012/13, as well as the high availability of large sizes at attractive prices and higher priced-small sizes. Size availability throughout the season was as follows: large sizes (60’s, 70’s, 80’s and 90’s) represented 56 percent, while medium and small sizes (100’s, 110’s, 120’s and 135’s) only represented 44 percent; this was a very drastic change, since last season availability of large sizes (80’s and 90’s) was only 15 percent, while medium and smaller sizes (100’s, 110’s, 120’s and 135’s) represented 85 percent.
FRESH TABLE GRAPES
Total Mexican table grape production for MY 2014/15 (May/April) is forecast at 261,000 MT, a marginal increase over MY 2013/14 production. According to producers, there were fewer cold hours than normal and higher daytime temperatures than expected that resulted in a very early crop for the state of Sonora. Harvesting begins in May and typically ends in July for Sonora; however, this marketing year harvesting began the last week of April. Table grape production in Zacatecas, the second-largest producing state, is expected to be good. Harvest is usually between July and October. Baja California and others harvest from June to August. Total production is sometimes difficult to determine since price relationships among table grapes, raisin grapes, and industrial grapes attract more grapes into or out of each market. New/Post production estimates for MY 2013/14 were updated from previous USDA/Official estimates, based on official information. New/Post table grape production for MY 2012/13 remains unchanged from previous estimates.
Area planted for MY 2014/15 is forecast to increase only marginally from the Post/New MY 2013/14 estimated area. Growth in planted area is limited as production costs are high and water is scarce. Sonora has been losing vineyards due to higher costs of production as well as unfavorable weather; however, planted area has been fluctuating between 14,100 and 16,000 hectares. Sonora growers have increased technological innovations and have higher density planting, achieving higher yields, compared to other growing regions. According to growers, there are 2,500 plants per hectare on average, producing an 8.2 kg/ box per plant. These yields change depending on the plant variety and cultivation methods. Baja California, on the other hand, has increased planted area as producers consider this region to have better weather conditions. Baja California is the third most important growing area and exports substantially all of its production. Most of the table grape production from the states of Zacatecas and Queretaro are destined for local markets. New/Post planted and harvested areas for MY 2013/14 were revised upward from previous estimates based on SAGARPA/SIAP estimates. Sonora seems to have planted slightly more area due to expected good revenues. Areas planted and harvested for MY 2012/13 remain unchanged.
The state of Sonora accounts for approximately 90 percent of total table grape production in Mexico and 86 percent of the total planted area. Market and growing conditions are favorable but water scarcity continues to limit aggressive expansion in Sonora as all table grape area is irrigated. The national average yield for MY 2013/14 was 15.41 MT/ha, lower than the MY 2012/13 yields of 17.35 MT/ha. Yields for MY 2014/15 are expected at about 15.2 MT/ha. Some of the main grape varieties that Mexico produces include Perlette, Flame, Sugraone, and Red Globe.
Costs of production in Mexico have been increasing in recent years. According to producers, average costs for 2014 were between U.S. $13,900/ha and U.S. $16,000/ha depending on the variety of grapes, use of fertilizers, and pest control systems. Producers indicate that expansion is limited mainly because of water scarcity in Sonora aquifers. As a result, producers are trying to increase yields and become more efficient rather than increase acreage. High interest rates for credit lines also limit table grape expansion. Producers’ report that the only credit to which they have access comes from U.S. brokers and distributors who give advance payments for harvesting and packing of table grapes.
The volume of Mexican grapes on the local market depends on export volumes, as producers tend to supply the international market before the domestic market. However, the local market has supplies from the United States and from Chile. Table grape consumption for MY 2014/15 is forecast at 186,000 MT as local demand is expected to be strong and at good prices. New/Post consumption estimates for MY 2012/13 and MY 2013/14 remain unchanged from previous estimates.
Table grape imports for MY 2014/15 are forecast to be very similar to those of MY 2013/14 or 77,000 MT as demand is expected to remain strong. Table grape imports for MY 2013/14 were revised marginally downwards, while imports for MY 2012/13 remain unchanged from previous estimates. However, as in other imported fruit, the swings in the peso/dollar exchange rate makes importers very cautious and trade can always slow down if the exchange rate increases price.
Not only does Mexico grow grapes that compete in the early part of California’s season, Mexico also imports from Chile. These grapes represent about 23 to 30 percent of total imports. Chile’s grape production is primarily counter-seasonal but Chilean grapes are also available during California’s early and late season. Chilean grapes for MY 2014/15 are expected to grow slightly over MY 2013/14 imports as weather was better. Chilean fruit was affected by frost during MY 2013/14 and imports were lower than expected.
Under different trade agreements, the import duty on grapes from the United States and Chile is zero, and both the United States and Chile continue to increase exports to the Mexican market. According to traders, U.S. promotional efforts to export table grape varieties to Mexico, other than Red Globe or Thompson, show good results. U.S. table grapes may only be imported from California due to phytosanitary restrictions that prohibit imports from other U.S. states.
Mexican table grape exports in MY 2014/15 are forecast to be slightly higher, despite an earlier crop in Sonora, compared to MY 2013/14, due to strong international demand. New/Post exports for MY 2013/14 were revised upward, while MY 2012/13 exports remain unchanged from previous estimates. Most of Mexico’s table grapes are exported to the United States. Growers indicated that free on board (FOB) export prices early in May 2014 began at prices at about U.S. $39.00 per 8-kg box of Perlettes and then fell to an average of U.S. $28.00 at the end of mid June 2014. Flame seedless grapes began in May 2014 at a high of U.S. $34 per 8-kg box and then fell to an average of U.S. $19 per 8-kg box in mid-June. Mexican export prices usually range between U.S. $14-16/ box, confirming that 2014 prices were good.
Although there is a little cross-over, there is no significant direct competition in Mexico between U.S. and Chilean table grapes. U.S. suppliers export to Mexico from August to December and from January to February—before and after the Mexican season. Chile usually exports from January to April and from June to July.
The Mexico–European Union (EU) Trade Agreement, signed in 2000, allows Mexican table grapes to be exported duty free, beginning in 2008. Mexico has not taken full advantage of this agreement since most of its grapes are being exported to the United States—said to be a more profitable market.
The United States remains the leading exporter of fresh grapes to Mexico with more than 75 percent of total imports coming from the United States. The marketing and promotional programs continue to focus on the retail sector as well as in the wholesale markets, which also serve as a major channel for U.S. grape distribution.
The Mexican market continues to see increased consumption of California table grapes, as exports to Mexico increased 41 percent for MY 2013/14 with a value of $98.5 million dollars, which represents a 21 percent increase over MY 2012/13 value. Programs focused on consumers help motivate the trade to handle California grapes at the start of the season and to build more volume throughout the season (which is May through January each year).
The strategy of using in-store promotions to motivate the trade to promote California grapes has been effective. In-store activities such as California grape sampling have differentiated California grapes from competing grapes in the targeted modern retail sector. The strategy is supported by point-of-sale (POS) materials, indicating the origin, health, and freshness message. In 2013, the market was the industry’s third-largest volume market and the fourth-largest market by value. Due to in-store activities, six retail chains participate in in-store promotional activities, showing a season-long, chain-wide increase in California grape volume movement.
U.S. Globe and Thompson varieties remain among the most popular in Mexico and importers base their purchases on the variety which is offered at the best price while still containing good sugar levels.
There is strong competition from Chilean and Mexican grapes in California’s early season (May through July) which makes it difficult for the entry of California grapes into the Mexican market. Additionally, Chilean grapes start to become available toward the end of the California grape late season volume