Futures and Commodity Market News

Sun May 11, 2008

Breaking financial news 24/7 courtesy of TradingCharts.com Inc. / TFC Commodity Charts

Dublin, May 08, 2008 (M2 PRESSWIRE via COMTEX) -- Research and Markets (http://www.researchandmarkets.com/reports/c91154) has announced the addition of Mexico Food and Drink Report Q2 2008 to their offering.

The Mexico Food and Drink Report provides independent forecasts and competitive intelligence on Mexicos food and drink industry.

Executive Summary

Under the North American Free Trade Agreement (NAFTA), the start of 2008 saw an end to trade restrictions between Mexico and the US on a raft of farm commodities including corn, beans, powdered milk and sugar. These were the last tariffs to be eliminated under the agreement and the move has implications for entire food and drink industry, as discussed in BMIs newly-published Q208 Mexico Food & Drink Report. NAFTA has been far from universally welcomed in Mexico with tens of thousands of agricultural workers taking to the street to protest about the new trade rules in February 2008.

However, for many of the country's food and drink producers the agreement should allow access to a new supply of cheap raw ingredients that could allow firms to boost margins and/or reduce prices. Mexican agricultural workers claim that the greater financial assistance provided to US farmers in the form of subsidies means that their own products are no longer competitive. This is exacerbated by the technological advantages of very sophisticated US agricultural producers. However, the lifting of trade barriers between Mexico and US has also been criticised on the other side of the border. Many US commentators suggest that NAFTA has caused a vast number of manufacturing jobs to be outsourced to Mexico where labour is cheaper. It has also been suggested that the increase in illegal immigration from Mexico to the US can be attributed to the demise of rural Mexican farmers' livelihoods because of an influx of cheap US imports. The logical move for many agricultural producers would be to move to products that cannot be grown in the US, such as coffee, however many agricultural workers found it easier to simply export themselves. Although it is generally accepted that NAFTA has been positive for the Mexican economy as a whole, with many industries booming thanks to the opening up of the massive US market, agricultural producers are perhaps on the sharp end of this process.

Outside of agriculture many Mexican firms involved in food and drink production are likely to benefit from the most recent abolishment of trade restrictions. For example, the Mexican soft drink industry - one of the world's largest - is expected to make a transition from sweetening products with relatively expensive Mexican sugar to sweetening with low-cost corn syrup imported from the US.

Another firm taking advantage of the opening up of the sugar market is Mexico's Ingenios Santos, which announced a joint venture with US sugar refiner Imperial Sugar. Sugar refiners such as Imperial and Santos will now have an enlarged market for their products and can now benefit from a greater abundance of raw material suppliers. The ongoing benefits of NAFTA to Mexico's food manufacturing industry was highlighted by confectionery giant Hershey's decision in January 2008 to close a number of plants in the US and open a new factory in Monterey, Mexico. The free trade in confectionery, implemented in 2005, means that firms can relocate to Mexico and take advantage of the cheap prices for labour and sugar while still having free access to the massive US market. Finally, the free trade in corn is likely to benefit the countries corn tortilla producers, who have had to contend with rocketing corn price in the last year on the back of rising demand from the biofuel industry.

Companies Mentioned:

Industrias Bachoco

Grupo Herdez SA de CV

Grupo Maseca SA de CV

Grupo Bimbo SA

Grupo Modelo

Coca-Cola FEMSA

Wal-Mart de Mxico Sa de CV (Walmex)

Controladora Comercial Mexicana SA de CV (CCM)

For more information visit http://www.researchandmarkets.com/reports/c91154

CONTACT: Laura Wood, Senior Manager, Research and Markets Fax: +353 1 4100 980 e-mail: press@researchandmarkets.com

M2 Communications Ltd disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.net on the world wide web. Inquiries to info@m2.com.

(C)1994-2008 M2 COMMUNICATIONS LTD

Please read the End User Agreement.
By accessing this page, you agree to the terms and conditions of the End User Agreement.

News provided by COMTEX