Mexico turns to Muslim consumers, in post-Trump beef trade pivot

20.03.2017

Mexico's cattle industry faces a struggle to disentangle its "symbiotic" relationship with its northern neighbour, as the country seeks to diversify both its import and export channels.

On Thursday, Mexico's Agricultural Secretary Jose Calzada announced a plan to seek alternative export relationships to the US, urging Mexican farmers need to emerge from their "comfort zone".

This year will see the launch of talks to renegotiate the North American Free Trade Agreement, which includes Mexico, Canada, and the United States.

Mexican cattle supply and demand forecasts, USDA Mexico City Bureau

                                                     2016               2017

Live cattle imports (1,000 head)        30                   33

Live cattle exports (1,000 head)        1,000              1,000  

Cattle ending stocks (1,000 head)     16,620            16,850

Beef production (1,000 tonnes)         18,79              1,910

Beef imports (1,000 tonnes)             190                190

Beef exports (1,000 tonnes)             255                 290

US President Donald Trump ran in part on a platform of renegotiating this deal, and potentially pulling out of it if compromises cannot be made.

A breakdown of trade relations between the US and Mexico would be a particular threat to the country's entwined beef industries.

Middle East, Russia options eyed

The threat of trade barriers is encouraging the Mexican government to search for alternative outlets.

"We have increased and accelerated country visits with the objective of diversifying even more quickly" Mr Calzada told a press conference.

Officials have already made trade-promotion visits to Colombia, Argentina, Chile, and the Arabian peninsula, Mr Calzada said, specifically citing the potential to sell up to $1bn of halal meat to Muslim nations in the Middle East.

Last year, Mexico obtained third-party certification for Halal slaughter (beef and poultry), with plans to grow the number of facilities from about 10 to about 130 by the end of the year.

Mr Calzada also noted Russia as a market for Mexican beef, as a quid-pro-quo for importing Russian wheat.

Russia is interested in 300,000 tonnes of Mexican beef, beyond the country's current export capacity, the minister said.

'Symbiotic relationship'

"The cattle and beef sectors in the US and Mexico have a long and symbiotic history," the USDA's Mexico City bureau said this week.

Cattle and their products criss-cross the border, in in complicated value chain.

Breeding cattle and semen are imported in large volumes from the US, to improve Mexican genetics.

Offspring born and pastured in Mexico are then shipped back north, to gain weight on grain in US feedlots.

After slaughter in the US, beef is shipped back to Mexico, along with leather, which is often returned to the US in the form of finished products.

But the threat posed by such dependence on what is currently looking like a shaky trade relationship is spurring a drive to diversify.

"Although efforts to diversify both imports and exports are a longterm trend, they have intensified in early 2017," said the bureau.


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