Mexico’s resilient pork sector gears for growth

Mexico’s livestock sector remains resilient in the face of numerous environmental, policy, and economic challenges, yet domestic consumer demand for pork continues to rise despite all-time high prices.

A growing pig herd

Mexico’s pig herd is forecast to expand to 21.45 million head in 2022, up 3% from 2021, according to a GAINS report released on in July 2021 by the United States Department of Agriculture (USDA). This growth is expected to continue due to improved swine genetics, breeding, animal health protocols, and strong domestic and export demand for pork. Furthermore, litter sizes are expanding, and hog mortality rates continue to fall.

Swine slaughter is forecast to reach 20.3 million head in 2022, up 3% from 2021. Industry sources report that hog weights for slaughter vary from about 120 to 127 kg.

Hog prices are expected to plateau in 2022 after record price volatility in 2020/2021 when average hog prices rose 11.4%, peaking at 33.3 Mexican pesos (US$ 1.67/kg). In terms of feed, Mexico’s National Association of Balanced Animal Feed (CONAFAB) noted that Mexico’s swine sector is forecast to consume about 17% of total domestic compound feed production of 40 million metric tonnes in 2021.

Importing swine genetics

Swine producers in Mexico primarily import breeding sows to improve herd genetics. In 2022, swine imports are forecast to reach 30,000 head. The US is Mexico’s leading live swine supplier with Canada being the only other supplier. In terms of exports, Mexico’s domestic swine production cannot meet growing domestic demand, so the country does not export live swine.

Pork is Mexico’s 2nd favourite animal protein

Chicken is Mexico’s favourite animal protein while pork sits in second position. Domestic and export demand for pork is forecast to strengthen, further driving pork production in Mexico, which, in 2022 is anticipated to reach 1.54 million metric tonnes, an increase of 3% from 2021. Meanwhile, pork consumption is forecast to expand to 2.13 million metric tonnes next year, an increase of 1.9% from 2021.

The Covid-19 pandemic saw households focusing on value, versatility, and convenience when it comes to meat. Many Mexican pork processors have expanded offerings to include quick and convenient meal preparation, including ready-to-eat, pre-seasoned, pre-portioned, and marinated pork products. Among lower-income consumers, demand for variety meats at wet markets and processed pork products expanded. Sausages, cooked hams, cold cuts and chorizo products account for the largest marketing channel for whole pork muscle cuts, viscera and trimmings in Mexico.

Spike in the price of pork

Lower-than-expected supplies in 2020 and gradual economic recovery in 2021 have pushed pork prices up. Between January and July 2021, retail pork prices rose about 17% year-on-year, which is the highest price spike since 2014.

Robust pork trade

Post forecasts 2022 pork imports to reach 980,000 metric tonnes, down 5,000 metric tonnes from 2021 as rapidly expanding domestic production outpaces demand growth. The US remains Mexico’s principal foreign supplier of pork. Mexico is also the 2nd-largest destination for US pork exports, closely following China.

Mexico’s pork exports in 2022 are forecast to remain unchanged from 2021 at 390,000 mt due to robust export demand in Asia and the Americas. Mexican exporters are focused on their most lucrative markets: high-value loin shipments to the US and specialty-trimmed cuts to Japan and Korea.

With duty-free access to the US under NAFTA and USMCA, Mexican pork exports to the US grew at a 23% compound annual growth rate (CAGR) from 2017 to 2020. Exports to Canada grew at a nearly 15% CAGR over the same period. Year-on-year Mexican pork exports to Canada, Guatemala, and South Korea accelerated in 2021, reaching all-time highs.

The information in this article has been extracted from a USDA GAINS report prepared by Gustavo Lara.