Jim Long President – CEO Genesus Inc. email@example.com
IV Congreso Nacional de Productuores Porcicolas
(Rivera Nayarit, Mexico)
November 02, 2015
This past week we attended the OPORPA Swine Association of Mexico’s annual congress in Riviera Nayarit, Puerto Vallarta, Mexico. This congress was held at the 5 star Paradise Village all-inclusive resort.
- The Congress was well attended with approximately 800 participants registered.
- The venue was excellent, very nice facilities situated on a Pacific Beach.
- The congress went from Wednesday afternoon to Saturday noon. There were industry exhibits (including Genesus), many speakers, and plenty of time for social interaction at the well-organized meals.
- We were honored to be one of the speakers; we spoke on Global Swine Markets as they relate to Mexico and the rest of North America. We are fortunate to have 400 – 500 people attend our talk, which was translated simultaneously into Spanish.
- The congress was a positive, joyous event as it was easy to see how Mexican producers had made significant profits over the last couple of years and an inherent optimism for the future. In our opinion, a much more optimistic producer group than we currently see in the US or Canada.
- The major take home message we had from the congress was that Mexico is expanding its sow herd. Our sense from talking to multiple sources is that Mexico will probably expand 100–150,000 sows over the next twelve months. It appears Mexico will expand more than the United States in this time frame.
Why? Our Thoughts
- Mexican producers are more confident of the future
- Industry has been profitable
- They are able to get building permits
- Environmental regulations are reasonable
- Animal welfare, related to buildings, and equipment regulations have not been modified like they have in Canada and the US
- Labour is available and economical relative to Canada and the US
- Confidence in growing pork domestic an export markets
- Mexico is now the US’ largest market for pork exports. Mexican producers are looking at capturing some of this demand for themselves. It will be a challenge as the US cost of production has always been historically lower, but on the flip side, the Mexican Ivog price is usually $10 – $15 higher than the US.
- We understand new Mexican farrow to finish facilities are costing approximately $4,000 to $4,500 US per sow (27 pig per sow annual capacity). Certainly less cost than farrow to finish facilities in the cooler areas of the United States and Canada. Advantage Mexico: gestation crates are now being installed.
- Smithfield Foods is expanding both its Carroll Foods operation in Puebla and the Norson Group in Sonora (about 100,000 sows currently combined). Not sure if this is correct but we are told the combined expansion will be over 100,000 sows over the next few years. It is interesting to us that Chinese owned Smithfield is expanding in Mexico, but from what we can determine, they are doing next to no sow herd expansion in the US. We think this in itself reflects what they see as the relative economic advantage now and in the future of the US and Mexico.
- In summary, Mexico Pork Producers have made money and are expanding.
World Health Organisation (WHO)WHO last week released a report that processed meat caused cancer. We expect because we are in the meat industry the story resonated the most with us. Just as Swine Flu when that misnamed, over spun calamity swept the media of the US, we as pork producers heard and followed every news report. Just as Toyota, employees must have been entranced by their media reports on their transmission failures leading to multiple deaths. Swine Flu and Toyota’s problems left the media. When the short-lived Swine Flu story stopped, pork consumption quickly recovered. Once Toyota’s story left, they went back to selling as many vehicles as anyone in the world. We expect the WHO story on meat will have no lasting media push. In the US, it appears it was a one maybe two-day story. We doubt McDonalds saw a drop in hamburger sales. In Mexico, the story lasted three days. We are fortunate to have in America Donald Trump and the rest of the gang who has the ability to gobble media time saving us from lame no nothing reporters acting like they are scientists reading verbatim what a 22 year old text copier wrote who in turn spends most of his spare time playing video games when not drinking coffee at Starbucks. One time we were in CNN world headquarters like all other media lemmings theirs was a whole floor of 20 somethings watching the other news channels, they all follow each other’s stories. Copying is sometimes called the greatest flattery, in other ways; it can be considered a lack of effort or originality. The bottom line is we expect the WHO story will pass. People are told everyday what can kill them. If you listened to it all you wouldn’t do anything. Our friend Bob Hunsberger does a weekly market report in Canada. The following is his comment on WHO’s report: “Just a note about the media. The so called, 18% increase in cancer risk from red/processed meat means that the average risk went from .68% to .80%. That’s actually a 17.6% increase from negligible to negligible. However the media, always looking for drama calls it ‘an 18% increase in risk.’”
Categorised in: Pork Commentary
This post was written by Genesus