Despite the effects of the global recession that began in 2008, Mexico’s rapidly changing domestic consumer preferences and increasing population have fueled dynamic changes in its beef industry, according to a USDA Economic Research Service (ERS) report on the Mexican beef industry.
While access to international markets and a growing global beef trade provided some impetus for change in Mexico, population and general economic growth prompted the most significant demand changes in the quantity and quality of meat. Overall food demand continues to grow rapidly and meat is gaining an increasing share of the demand for protein, according to the report authored by Derrell Peel, Oklahoma State University Extension livestock economist, and ERS economists Kenneth H. Matthews Jr. and Rachel Johnson.
Mexico demands more grain-fed beef
That changing consumer preference is good news for the U.S. beef industry, as Mexican consumers are demanding more grain-fed beef than the traditional grass-fed beef. This change in consumer preference will drive changes in Mexican cattle production, the authors say. As more cattle are raised using semi-intensive and intensive feeder cattle production systems, not only will the number of cattle suitable for export to the U.S. market increase, but more cattle will likely be slaughtered in Mexico to meet growing consumer demand.
While Mexican consumers prefer a leaner product than U.S. consumers, U.S. beef is helping Mexico meet the rapidly growing demand and increased preferences for higher quality meat. Mexico is currently one of the largest markets for U.S. beef exports.
And the U.S. has long been a market for Mexican stocker and feeder cattle. In addition to the higher prices that Mexican producers can obtain for their cattle in the U.S., the increasing demand for higher quality meat may partially explain why Mexican cattle are exported to the U.S. for finishing. The U.S. holds the advantage in feeding cattle, due primarily to lower grain costs. Thus, Mexico can more effectively export young cattle to the U.S. and import higher-quality beef.
Until the last decade, stocker production was a mostly nonexistent, or at least an unrecognized part of the Mexican beef cattle industry. Historically, calves in the North were exported at weaning; those not exported became part of the domestic grass-fed production system, often spending 2-3 grazing seasons on pasture before slaughter.
That may change. As the Mexican beef industry evolves, stocker production will likely become a more distinguishable segment of the industry, the report says. Producers in northern Mexico who export calves are increasingly aware of the value of selling heavier cattle. Some calves sold at weaning in the fall are now retained on winter pasture until spring. Unfortunately, increased stocker production in Mexico implies a decrease in export supplies of cattle going into stocker programs in the U.S.
Continued population and economic growth in Mexico indicate there is considerable potential for fed beef demand, including demand for U.S. beef imports. But there will be challenges for Mexican cattlemen looking to expand their industry.
Although demand for fed beef has increased in recent years, demand for pork and poultry in Mexico has increased as well. Poultry consumption has doubled, while beef and pork consumption has grown more modestly. That has increased competition for feed resources. An increase in total livestock production also means increasing competition with other types of food and fiber production for limited ag resources, the report notes.
The change in demand for fed beef also has tremendous implications for the type of cattle fed in feedlots, feeding strategies and the quantity of fed-cattle production. Moreover, a change from grass-fed beef to fed beef in Mexico has major implications for overall levels of beef production, according to the report.
Domestic production is limited by forage availability for the cowherd, which is currently limited by forage used for grass-fed production. An increase in more intensive stocker and finishing systems will release forage resources for increased cow-calf production, the report says.
Beyond that, the Mexican consumer is changing. Changes in retailing, especially rapidly expanding supermarkets and growth in away-from-home consumption, are part of a larger set of lifestyle changes causing significant shifts in market infrastructure and marketing practices within the industry.
To read the complete report, go to www.ers.usda.gov