Mexico. Fresh Deciduous Fruit Annual. Nov 2013 Nov. 29, 2013
Apple production in Mexico for MY 2013/14 (August/July) is forecast at 605,000 metric tons (MT), a record crop due to better weather. Total pear imports are forecast to increase 11% for MY 2013/14 (July/June). Total Mexican table grape production for MY 2013/14 (May/April) is forecast lower at 261,000 MT, due to a cooler winter and spring in Sonora. Grape exports are expected to decline due to a delay in the start of harvest. The United States remains the major supplier of deciduous fruits to Mexico.
Apple production in Mexico for MY 2013/14 (August/July) is forecast at 605,000 metric tons (MT), a record crop compared to last year due to better weather and higher yields. Average yields are forecast at about 10.34 MT/hectare (Ha). The state of Chihuahua, the main apple producer, recovered from last year’s low of 10.4 million 20 kilograms boxes to an expectedly high production of 20 million boxes or about 400,000 MT. Yields in Chihuahua are usually the highest in the country and average between 15-19 MT/ha. The state of Durango, the second largest production state, also recovered and production is estimated at 71,200 MT. The state of Coahuila, the third ranked apple producer, had hail damage during July 2013 and production is estimated at about 32,000 MT. The state of Puebla, the fourth largest apple producing state is expected to have 35,000 MT of apple production.
The New/Post production estimate for MY 2012/13 was revised downward from previous estimates to 375,045 MT, with the state of Chihuahua losing about 43 percent of the apple crop, as a result of dry weather and atypical frost. The national average yield for MY 2012/13 is estimated at 6.42 MT/Ha. The New/Post apple production data for MY 2011/12 remain unchanged from previous estimates.
Total area planted for MY 2013/14 is forecast to increase marginally from New/Post MY 2012/13 area as increases in some states are offset by decreases in other areas. Planted and harvested areas for MY 2012/13 were updated based on official estimates from SIAP/SAGARPA. Estimates for MY 2011/12 remain unchanged from previous estimates. 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, and water scarcity.
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, about 40 percent of the apple area in Chihuahua utilizes advanced technology.
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). In addition, they are using advanced technology and newer irrigation systems. 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 58 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. $2,350 to $3,460 per hectare. 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.
According to the National Service of Market Information (SNIIM), wholesale prices during September 2013 were lower compared to prices in 2012. Domestic Golden Delicious apples were 24.8 percent lower in peso terms in September 2013 or about US$1.56 per kg (MX$20.54/kg), while in September 2012 prices were on average US$2.11 per kg (MX$27.44/kg). Domestic Red Delicious apple producers’ prices were 33.4 percent lower in peso terms in September 2013 or about US$1.34 per kg (MX$17.73/kg) while in September 2012 prices were on average US$2.05 (MX$26.63/kg). Lower prices are a result of a higher production of apples of smaller sizes.
Apple consumption for MY 2013/14 is forecast to increase compared to New/Post estimates for MY 2012/13 due to expected higher domestic supplies at lower prices which will increase demand. New/Post apple consumption estimates for MY 2012/13 were revised downward from previous estimates as domestic and imported apple prices were higher than expected, thus reducing demand. Apple consumption for MY 2011/12 remains unchanged.
New/Post estimates for apple imports for MY 2013/14 are forecast to be lower compared to MY 2012/13 as there are more apples from the domestic crop at lower prices. However, prices for imported apples are expected to also be low as there are more apples in the international market compared to the previous year. 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 U.S. west coast.
New/Post estimates for apple imports for MY 2012/13 were revised downward from previous estimates to 265,490 MT but still represent a record in apple imports. Despite higher prices for apples, demand was strong as the domestic crop was down due to drought and frost. Apple imports for MY 2011/12 remain unchanged from previous estimates.
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% of U.S. exports with California, Michigan, and Virginia supplying the remainder. California increased apple exports from 21,750 boxes in MY 2011/12 to 38,340 boxes in MY 2012/13. 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 strong 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 257 MT during MY 2010/11 and 316 MT during MY 2011/12, however, for MY 2012/13 imports were lower as Mexican production was also low. Mexican apple exports to the U.S. would have to come from certain fruit fly free counties recognized by APHIS in the state of Chihuahua.
The NAFTA tariffs for U.S. and Canadian apples were completely lifted on January 1, 2003, bringing the duty to zero. Retaliatory duties imposed on imported U.S. apples of 10 percent were removed on October 14, 2011, which resulted in demand growth. 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.
The U.S. remains the leading provider of deciduous fruit in Mexico, such as apples, pears and grapes, as local production is not sufficient to address the domestic demand. The U.S. apple industry’s continued marketing and promotional efforts have significantly contributed to the dominant position that U.S. apples have in Mexico. 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. The retail market remains the primary channel of distribution for fresh apples in Mexico, representing around 95% of fresh apples consumed in the country. The food processing industry in Mexico is likely to increase consumption for apples as healthy trends lead to higher demand for naturally flavored fruit juices and cocktails. During the 2012-2013 season, four varieties continued to dominate the market with 94% of the total volume: 43% Red Delicious, 33% Golden Delicious, 18% Gala, 3% Granny Smith, 1% Fuji and 2% other varieties.
Mexican consumers still prefer the Red and Golden Delicious varieties, and have developed a strong preference for the Gala variety positioning it as the third preferred variety. Another variety which has forged itself a market niche is Granny Smith, which has been positioned as an ideal apple to be consumed as a snack with chili powder and is highly recognized by its unique green color. Other varieties are used by retailers to create excitement in their shelves as an in and out item. The varietal mix offered by retail stores has proven to add value to the apple category. By growing the size of apple displays, retailers can accommodate larger volumes of product while implementing better care and handling techniques such as effective use of color breaks, rotation and proper handling.
The U.S. Fresh Fruits Promotional Campaign, a USDA Global Based Initiative (GBI) program, ran its 3rd and final year starting in October of 2012, and ending in March 2014. The Washington Apple Commission, Pear Bureau Northwest, and California Table Grape Commission, in collaboration with Lazy Town Entertainment, several major retail chains and wholesale groups in Mexico, and with the backing of the Mexican Secretariat of Health, carried out a 2 month-long point of sale promotion. There will be public relations and in-store demos campaign throughout Mexico in November 2013 and March 2014. The U.S. Apple Export Council also carried out promotions in Mexico City, Guadalajara, Tijuana, Mexicali and Veracruz increasing apple sales in those areas.
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.
Mexican producers continue to increase market promotions. Chilean producers have also been working aggressively to penetrate the Mexican market, introducing several varietal characteristics in an effort to target different population groups. The Chilean promotion strategy focuses more on price than on quality. Chilean producers are also marketing the Royal Gala variety in Mexico.
Mexico continues to be the number one export market for Washington Apples. The 2012-13 marketing season finished with Mexico importing a total of 13,665,209 cartons, 33.4% above the 2011/12 season and a new export record for Mexico. This is a strong finish considering that worldwide, Washington Apple exports grew by 10.5%.
Mexico’s pear production is relatively low so SAGARPA only publishes pear production data on an annual basis. Total pear production is forecast at 25,000 MT for MY 2013/14 (July/June) - a 16 percent increase from MY 2012/13 due to expected better 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. Pear yields for MY 2012/13 were revised downward from previous estimates as yields decreased to 5.2 MT/Ha from 6.38 MT/Ha that prevailed in MY 2011/12. Pear production for MY 2010/11 remains unchanged.
Approximately 87 percent of the pear planted area is rain fed. Michoacan, 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 2013/14 is not expected to change much from the previous year. Planted area for MY 2012/13 was revised downward according to official data from SAGARPA. Planted and harvested area for MY 2011/12 remains unchanged from previous estimates.
Domestic demand is satisfied mainly by imports from the United States which represent about 90 percent of total supply. Pear consumption for MY 2013/14 is forecast to increase due to higher demand, as imported pear prices are expected to be less expensive compared to the previous marketing year due to an expected larger U.S. harvest. Pear consumption for MY 2012/13 was revised downward due to higher consumer prices based on the tight supply situation in the U.S. Pear consumption for MY 2011/12 remains unchanged from previous estimates.
Pear imports for MY 2013/14 are forecast to increase about 11 percent compared to New/Post MY 2012/13 import estimates as U.S. supplies are expected to be higher and at better prices. New/Post pear import estimates for MY 2012/13 were revised downward about 13.4 percent compared to MY 2011/12 imports, as the U.S. harvest was lower than expected, and prices were high. Average prices for MY 2012/13 were about $1,346.92 dollars per MT while average prices for MY 2011/12 were $898.57 dollars per MT. Pear imports for MY 2011/12 remain unchanged. As in apples, pear imports increased as the retaliation tariff of 10 percent on U.S. imported pears was cancelled on October 14, 2011.
U.S. Anjou pear import season is from September to July, though cold storage facilities in Mexico provide year-round availability. 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 35 MT during MY 2011/12 and 27 MT during MY 2012/13.
As Mexico’s main pear supplier, market promotion efforts for U.S. pears continue in several Mexican cities, supermarkets, and street markets. With intensive promotional efforts every season, the United States has been successful in turning Mexico into the largest export market through campaigns that include a wide mix of activities targeting both the trade and consumers.
Consumer focused-activities in Mexican supermarkets strengthen and increase the demand for U.S. pears by educating consumers in:
• wide pear variety and assortment available
• sweet and delicious tastes
• providing consumers usage/cooking ideas
• pears’ nutritious values
This was achieved by promoting these messages at different levels and through an integrated mix of activities, all targeting the retail sector where 95% of fresh pears are consumed in Mexico.
In addition, technical activities continue to be very important in the overall program. Because staff rotation is high in supermarket chains, the need for training is a reality which the US must continue addressing in order to insure that pears from the U.S. are being handled correctly. Through training, the United States makes the trade aware of the importance of correct handling and exhibition techniques, which is translated into a trade’s higher confidence for managing larger volumes and more pear varieties. Also, in food service and processed foods, pears are increasingly popular for use in juices, jams, cereals, breakfast bars, baby food, and baked goods. U.S.-origin pears are from Washington, Oregon, and California.
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.
The United States is by far the largest and most important supplier of imported pears in Mexico, with a market share of 98.9%, followed by China with 0.5% of the market, Chile with 0.47% of the market and Argentina with the remaining 0.13. For 2012 per capita consumption was about 1.86lb.
U.S. Anjou pears were priced ranging from U.S. $22.82 in April and U.S. $32.94 in September 2013 per 18-kg box. Prices were lower in 2013 compared to prices in 2012 of U.S. $38.02 in August 2012 and about U.S. $37.83 18-kg box in October 2012. Anjou pears continue to be the most sought after variety in the market followed by Bosc, Bartlett, and the Red Anjou varieties.
In 2012-13, Anjou exports to Mexico reached 2.59 million boxes, followed by Bosc with 224,796 boxes, Bartlett with 176,630 boxes, Red Anjou with 42,459 boxes, Comice with 16,866 boxes, and other Reds, Seckel and Concorde varieties with 14,462 boxes, highlighting Mexico as a multi-variety market. The suspension of the retaliation import duty has benefited volume imports for USA Pears.
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 and the main characteristics of the different pear varieties.
FRESH TABLE GRAPES
Total Mexican table grape production for MY 2013/14 (May/April) is forecast at 263,000 MT, slightly lower compared to our revised estimate for MY 2012/13, as a cooler winter and spring delayed crop development in Sonora. Zacatecas was also affected by cool temperatures and/or hail. Harvesting began in May and typically ends in July for Sonora. 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 2012/13 were revised upward from USDA/Official estimates as cold hours and temperature were good during the growing season. Table grape production for MY 2011/12 remains unchanged.
Area planted for MY 2013/14 is forecast to increase only marginally from the Post/New MY 2012/13 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 15,000 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 area for MY 2012/13 was revised upward while harvested area was revised downward from previous USDA/Official estimates based on SAGARPA estimates. Sonora seems to have planted slightly more area due to expected good revenues. Area planted and harvested for MY 2011/12 remain unchanged. Area harvested was down due to cutbacks in other states. 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 2012/13 was high at 17.35 MT/ha, and yields for MY 21013/14 are expected at about 16.5 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 2013 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. Therefore, table grape consumption for MY 2013/14 is forecast at 165,000 MT as local demand is expected to be strong and at good prices. However, less imported product from Chile is expected. New/Post consumption estimates for MY 2012/13 were revised upward due to stronger demand than expected. Consumption for MY 2011/12 remains unchanged.
Table grape imports for MY 2013/14 are forecast to decrease slightly to 54,000 MT compared to MY 2012/13 due to less imports from Chile as fruit in that country was affected by frost. U.S. supplies are expected to be similar to those of MY 2012/13. 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. New/Post table grape imports for MY 2012/13 were revised downward from USDA/Official estimates based on trade data. Table grape imports for MY 2011/12 remain unchanged.
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 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. However, for MY 2013/14 Chilean fruit was affected by frost and imports are expected to be low. 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 2013/14 are forecast to decrease compared to New/Post MY 2012/13 due to the weather related delayed start to the season, including harvesting, and stronger expected domestic demand. However, international demand is expected to be strong. Exports for MY 2012/13 were revised downward but still represent strong international demand and good international prices. Exports for MY 2011/12 remain unchanged.
Most of Mexico’s table grapes are exported to the United States. Growers indicated that free on board (FOB) export prices late in May 2013 began at prices of about U.S. $40 to $45 per 8-kg box of Perlettes and then fell to an average of U.S. $18 to $20 per 8-kg box in mid June 2013. Flame seedless grapes began in May 2013 at a high of U.S. $32 to $33 per 8-kg box and then fell to an average of U.S. $20 to $22 per 8-kg box in mid June. Mexican export prices usually range between U.S. $14-16/ box, confirming that 2013 prices were very 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 66 percent of total imports coming from the U.S. 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, with exports to Mexico increasing by 24 percent between 2008 and 2012. This volume growth was matched by an increase in export value of 32 percent during the same time period. 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 goal with consumers is to continue to build origin recognition, awareness of the health benefits, freshness and convenience of grapes from California, while at the same time creating impulse sales at retail. In 2013, the targeted cities are Mexico City, Monterrey, Guadalajara and Puebla. Approximately 4,500 demo days for the whole season are planned with 100 percent aimed at the retail chains: Wal-Mart, Comex, Soriana, Chedraui, HEB, S-MART and COSTCO. The program is supported by point-of-sale (POS) materials, indicating the origin, health and freshness message. Additionally, a themed promotional program for the Christmas/New Year period is being implemented for the first time in December 2013 to motivate larger displays in retail chains at this important grape consumption time of the year. These in-store activities are being implemented throughout the targeted retail chains through December 31st.
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