Pig production is increasing in Mexico
Demand for pork in retail is growing and processing plants have not been impacted by significant COVID-19 outbreaks.
Pig production in Mexico is expected to rise to 20.275 million head this year, with a small increase next year, according to the latest USDA Foreign Agricultural Service (FAS) report. Pig production in the country is supported mostly by increased demand in domestic retail but also by new export opportunities to China, Japan and South Korea. According to Mexico’s Agriculture Secretariat, Mexico’s pork production grew 6.5% in 2019, keeping a steady pace through the first quarter of 2020. In 2020, however, farm gate prices of hogs in Mexico decreased 30% due in part to seasonality and partly because of the backlog of hogs in the United States, which depressed US hog prices and had the same ripple effect on Mexico’s hog prices. This has been a recent complaint from hog producers, as hog producer income is being negatively affected while pork prices in retail stores and public markets have increased 5% in April 2020 alone. During May-June 2020, as the United States’ production began to stabilize following COVID-19 related production problems, hog prices in Mexico began an upward trend to a more favourable scenario for domestic swine producers. When slaughter and pork production in the United States stabilized, US hog prices rose and raised Mexico’s hog prices as well. US and Mexican hot markets are tightly connected and ripple effects are easily felt through the supply chain. Since 2019, demand for pork meat in Mexico has continued to grow, as adverse macroeconomic conditions escalate and more retail consumers switch from beef to pork as a cheaper animal protein. In 2019, Mexico’s GDP contracted 0.01% year-over-year (YOY). In 2020, Mexico’s YOY GDP growth is estimated to contract 10%. In 2020, this phenomenon will increase demand for pork and pork-based products, as household disposable income remains depressed, says the report.
Retail consumer demand for pork meat continues driving pork production increases in Mexico. Changing retail consumer trends toward more affordable animal proteins (compared to beef, for example) driven by poor economic conditions in Mexico continue to increase demand for pork cuts and pork-based products. Mexico’s TIF establishments were able to maintain uninterrupted pork production due to timely implementation of sanitary protocols in as preventive measures to possible COVID-19 outbreaks at plants and resulting plant closures. Meatpacking plants’ COVID-19 preventive measures allowed Mexico’s pork production to continue its upward trend to meet demand, especially from March to June 2020.
Mexico’s pork consumption is expected to reach 2.125 million tonnes this year and may increase to t 2.15 million tonnes next year. Mexican consumers’ buying habits have changed, challenging pork processors to provide a wider range of options. Domestic industry reports increased demand from single individual households who want quicker and easier meals, making pre-portioned cuts more relevant. Versatility, convenience, flavour, and a variety of choices have become the trend among the expanding urban middle class, driven by pressure to save time, seek added value, and have greater convenience in heating and serving meals. However, in more rural areas with generally lower-income populations, backyard slaughter for household consumption continues to be prevalent.
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