Mexico a market for premium beef

Mexico seen as a new market for premium beef and lamb

Beef
MARKET OPPORTUNITY: The Cathedral in Mexico City overlooking the city's main square. With around 130 million people and a new trade agreement, Mexico is seen as a major opportunity for Australian red meat.

MARKET OPPORTUNITY: The Cathedral in Mexico City overlooking the city's main square. With around 130 million people and a new trade agreement, Mexico is seen as a major opportunity for Australian red meat.

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A new trade agreement and a growing economy means Mexico's taste for premium beef imports is growing, and Australia's keen to be a supplier.

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Mexico has been identified as a future market opportunity for Australian red meat.

In 2018 Mexican beef imports increased to approximately 205000 tonnes cwe, with over 80 per cent of it coming from the US. the US Department of Agriculture expects that figure to grow to around 220000 tonnes this year, with shoulder clods, or chuck, and rounds, the most popular US cuts exported.

While Australia is a relatively small supplier last year it increased volumes sent there by nearly 400 per cent on 2017 figures, to 604 tonnes. The Australian chilled beef volume was also up significantly to 210 tonnes in 2018, an increase of 136 per cent from the previous year.

This year the figure for both cuts is tracking higher with 583 tonnes shipped to end of May 2019.

Graph courtesy of IHS Markit and MLA.

Graph courtesy of IHS Markit and MLA.

Preferred cuts

Currently the main cut imported from Australia is thin flank, which can be grilled and used in local dishes like fajitas.

Lean cuts like that are currently in high demand in the US where Australia's leaner manufacturing cuts help offset domestic supplies of more fatty cuts.

MLA's business manager for North America Rob Williams said there is enough to supply both markets.

"Given that Mexico is such as small market and we are targeting the premium end, it is likely that that supply changes will not be as large an issue as for other markets," he said.

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Mexican Consumers

MLA sees Mexico as a future market for premium cuts of Australian beef, and has reported that it has started to appear in high-end steak restaurants.

The Mexican population currently stands at close to 130 million people, with a third of them younger than 15 and around 10 per cent older than 65. Those demographics indicate a working age demographic, with the potential to drive increased domestic consumption and economic growth.

That combined with good economic growth means consumers have more to spend and MLA is hoping part of that extra income will lead to increased demand for high quality food, some of which will have to be imported.

Earlier this year it was an exhibitor at Expo Carne, which is described as Latin America's largest exhibition for the meat and dairy industries. As well it has has engaged a part-time business development consultant based in the country to further explore demand trends and run specific events to promote Australian beef and lamb.

Rob Williams said they are starting to see the results from that increased presence.

"Our presence at the show [Expo Carnes] led to at least one new customer for one of our key exporters, in addition to multiple significant leads," he said.

"[As well] we are working with two key suppliers at the premium end to highlight the attributes of a premium grain fed and a premium organic product.

"Both products are showing significant in-roads at the higher end of food service, albeit at small volumes. In addition, we plan to support some launches with another supplier at a high end steakhouse chain."

A younger national demographic and more expendable income means Mexican households are spending more and buying better quality food products.

A younger national demographic and more expendable income means Mexican households are spending more and buying better quality food products.

Trade agreement

Last December the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), came into force. That has provided some certainty for Australian trade to Mexico with the 20 to 25 per cent tariff to be eliminated within 10 years and the 10 per cent sheepmeat and goat meat tariffs will be eliminated within 8 years.

In addition, the Mexican government announced in 2017 that it had established provisions on unilateral tariff rate quotas, which allows up to 200000 tonnes a year tariff free beef imports from non NAFTA countries, with the quota issued on a first-come-first-served basis until December this year.

"We are looking mainly to take the opportunity for zero tariff until the end of 2019, and of course medium term growth with the guarantee of tariff reductions over 10 years under CPTPP," Mr Williams said.

Mexico also has the potential to be significant competitor. Last year it exported 305000 tonnes, and the USDA predicts it will export 330000 tonnes this year. Most to the US, but Japan, Hong Kong and South Korea have also increased their imports.

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