Southern Exposure

Cecilia Navarro takes her two daughters grocery shopping every Wednesday afternoon. Being a good mom and homemaker, she thinks it's important that Elisabeth, 18, and even three-year-old Katherina learn how to shop for food. She explained this (through her daughter/translator) recently when she stopped by the meat case at her favorite store the Mega supermarket in Mexico City, Mexico. Navarro's attention

Cecilia Navarro takes her two daughters grocery shopping every Wednesday afternoon. Being a good mom and homemaker, she thinks it's important that Elisabeth, 18, and even three-year-old Katherina learn how to shop for food.

She explained this (through her daughter/translator) recently when she stopped by the meat case at her favorite store — the Mega supermarket in Mexico City, Mexico.

Navarro's attention to food preparation is not abnormal activity in this Latin American country where food and meals are often the nucleus of family unity. Mexican women in all social levels tend to be very careful and studious shoppers.

Watching as she browsed through the meat case, it was evident that Navarro prefers U.S. beef. But, when asked why she prefers meat products from the U.S., her immediate response was simply, “Because I know it's safe.”

That might sound surprising in light of the news and rhetoric surrounding the beef industry following last year's discovery of bovine spongiform encephalopathy (BSE) in the U.S. And, Navarro knew that the Mexican government had responded with a ban on U.S. beef and beef products.

On March 3 though, after double-barreled pressure from consumers and meat merchandisers, Mexico re-opened its border to boneless beef originating from animals less than 30 months of age. Like many other Mexican consumers, Navarro was happy to see the ban lifted — at least partially. At this time, the Mexican market still remains closed to bone-in beef and beef variety meats.

But don't believe for one minute that the border reopened solely because the Mexican government wants to be neighborly. Cecilia Navarro, along with millions of other Mexican consumers, is able to enjoy an adequate, affordable supply of U.S. meat primarily because the U.S. Meat Export Federation (MEF) is working to keep beef flowing into Mexican diets. The MEF works on many different fronts:

  • Keeping political pressure on the Mexican government to resume normal trading relationships.

  • Building a positive and credible consumer perception of U.S. beef — both at the retail and food service levels.

  • Monitoring trade rules and regulations, and assisting in cross-border business relationships.

Following The U.S. Lead

For 10 years, Mexico has been a rising star in the sphere of U.S. beef promotion efforts. Beef and variety meat exports to Mexico have risen from 80,000 metric tons (mt) in 1993 to 336,000 mt last year. The value of U.S. beef exports to Mexico peaked in 2002 at $854 million.

The MEF has two offices in Mexico. The retail, food service and consumer marketing programs are conducted out of Mexico City. The Monterrey office focuses more on border and trade issues.

Their work has been cut out for them lately. The Mexican export picture was looking to set new records in 2004 — and possibly surpass Japan as America's top beef export destination. That was until the industry hit the BSE snag in December.

“There were some interesting times after that — but we're getting back on track very quickly,” says Homero Recio. He's MEF vice president for Western Hemisphere operations.

“We have some more things to work on before we get back to full-speed, but we're up to the challenge on all fronts,” he adds. “There are a lot of politics involved.”

He credits the Mexican government's animal health officials at the operational level for taking a scientific approach to animal health issues like BSE.

He stresses that in dealing with the Mexicans and the impacts of the North American Free Trade Agreement (NAFTA), he's gained an understanding that, contrary to what many people want to believe, we truly are in a North American beef market.

“The Mexican government has said time and again with regard to BSE that they'll follow the lead that the U.S. takes with Canada,” Recio explains. “The longer it takes to normalize the beef trade between the U.S. and Canada, the longer it will take for the U.S. to restore a full trading relationship with Mexico.”

Ironically, he says, the rebound in U.S. beef exports to Mexico is being slowed by larger shipments from Canada to Mexico.

The Mexican Ministry of Agriculture was subjected to tremendous pressure by Mexican cattlemen to use the BSE case to keep U.S. beef out of Mexico for as long as possible, says Bruce Zanin, director of the U.S. Agricultural Trade Office in Mexico City.

“But, with 84% of Mexico's ag exports ending up in the U.S., the government needed to show good faith in moving quickly to reopen beef trade,” he explains. “The key is that there was no consumer reaction to the BSE case in the U.S.”

Disparities In Trade?

Of course, most Mexican ranchers would prefer to keep their border closed to imports.

“But, the fact is Mexican producers simply can't supply enough beef to satisfy the country's beef demand,” says Gilberto Lozano, MEF director general for Mexico. He says today Mexico is only about 82% self-sufficient in beef production.

“Plus, there just isn't anywhere near the supply domestically of the quality beef that's increasingly wanted in the higher-end markets — both at home and in food service,” Lozano adds.

While Mexico's cattle-savvy politicians generally state that the domestic industry is being harmed by U.S. beef imports, they also recognize the importance of the live cattle trade between Mexico and the U.S. Last year, 1,239,000 head of cattle — most feeder steers — were exported to the U.S. from Mexico.

In the same breath, Mexican politicos lament that the Mexican pork industry has been devastated by U.S. producers “dumping” cheap, subsidized pork into Mexico. Mexican producers say they can compete with their U.S. counterparts, but the Mexican treasury cannot compete with the U.S. treasury.

They blame, in part, direct and indirect subsidies paid to U.S. pork and beef producers on much of the disparities in meat trade between the two countries.

Mexican producers have suffered from a decline in borrowing capability. Production loans are nearly non-existent — with ag lending in general dropping 77% between 1994 and 2001, says Zanin.

“You can't be in this business long without realizing trade is a two-way street — the bottom line is that the Mexican consumer is better off with NAFTA,” says Recio. “That's why we are here — to help U.S. producers gain international markets and to help people in this country have access to U.S. meat.”

Life's A Lot Easier

The MEF predicts a growing Mexican consumer demand for meat protein in general. Demand and per capita consumption are growing rapidly in the middle and upper classes where there is more disposable income.

As incomes increase, Mexicans tend to increase fresh beef consumption over other proteins. Typically, beef variety meat consumption declines as incomes increase.

Meanwhile, at a Tok's Restaurante, in Mexico City, Gustavo Pérez, is celebrating having U.S. beef — mainly steak cuts — back in his stores. He's director of food purchasing for the 42 Tok's restaurants scattered around Mexico.

“My life has been a lot easier since the Mexican border was reopened to U.S. beef imports,” he says. “It would have been devastating to us if the ban would have persisted.”

Pérez says his supply of U.S. beef all but dried up for one month after he exhausted beef he had put into storage prior to Dec. 23. As supplies dwindled, many of his 1 million/month, middle-class customers complained of the taste, toughness and lack of consistency of the substitutes for U.S. beef, he says.

While Pérez chooses to label entrees featuring U.S. beef and pork (with the “checkoff” logos) on his menus, he was so confident the border would reopen again that he didn't print new menus. Pérez is now waiting for the day when he can again feature bone-in beef products from the U.S.

“You can tell your American ranchers that we will continue to pressure our politicians who must recognize how much we need your beef,” Pérez concludes. “It's our best choice for many reasons — but mostly because our customers keep yelling at us to keep U.S. meat on our menu.”

The Future For Mexico

The U.S. Meat Export Federation says the future for U.S. beef exports to Mexico appears quite rosy for several reasons:

  • The Mexican population, currently at 105 million, is growing strong at a rate of 1.8%/year. And, the population is young — 50% are under 25 years old.

  • Mexico's economic growth is closely correlated with that of the U.S. U.S. economic growth in 2003 was near 3.2% and should reach 4.6% in 2004.

  • Mexican cattle numbers dropped 5% last year due to a stagnant calf crop and continued drought conditions in the northern regions.

  • Domestic beef production is expected decline in 2004 as cattlemen are discouraged by low profitability, foreign imports and a lack of credit.

  • Most of the cattle raised in Mexico are grass-fed as many independent cattlemen and feedlot operators cannot afford imported feedstuffs.

  • Mexico's self-sufficiency rate in beef is estimated at 82%, not including variety meats.

Mexico's Angélica Loves U.S. Meat

Mother's Day is a huge celebration in Mexico. This year, the U.S. Meat Export Federation (MEF) teamed up with one of Mexico's premier contemporary entertainers — 28-year-old Angélica Valé — for the second annual Mother's Day Appreciation Celebration in Mexico City. Angelica's performance before nearly 3,000 adoring fans capped a daylong program of cooking and nutritional seminars designed to promote beef and pork in today's balanced family diet.

Several MEF representatives and a group of U.S. ag journalists were on hand as part of a week-long informational tour. The trip was hosted by the MEF, but the United Soybean Board (USB) picked up the tab as part of an effort to forge a stronger alliance between livestock and soybean producers.