Mexican Beef Sees More Export, Domestic Consumption Drops

On March 21, the Mexican Council for Meat Products (COMECARNE) issued a statement informing that the industry had enough resources and the logistical capacity to maintain the supply of meat products in the face of the COVID-19 contingency. Mexican consumers have seen supply of meat products to supermarkets remain steady, as the industry, identified as essential, has maintained its production and supply chain up. The government has imposed mandatory safety measures for workers as processing plants continue to roll out products. So far, COVID-19 has had a bigger impact on the consumption side. Last week, it was reported that the beef sector in Queretaro had seen a  contraction as a result of lower consumption. The price of beef has fallen by as much as 27 percent. With a supply surplus, authorities are now looking at reducing import volumes and increasing points of sale. On April 3rd, the Union of Regional Cattle Farmers of Durango (UGRD), reported that beef consumption had dropped by 25 percent. The primary reason, it cited, was more cautious spending behaviour as a result of economic uncertainty. It is a recurrent phenomenon that during times of economic anxiety, consumers lean towards cheaper proteins such as chicken and eggs.

Mexican beef exports are faring well this year. Exports rose by 14.5 percent in the first trimester compared to 2019. The growth factor is increasing demand from Asian-Pacific markets, principally Japan, Hong Kong and South Korea. The US remains the largest destination of Mexican beef exports with 86 percent, followed by Japan with 6 percent. Exports to the US grew in value by 5.6 percent from January to March 21, compared to the same period in 2019.

The next target market, according to president of the Mexican Beef Exporters Association, Rogelio Pérez Sánchez, is China, which could see a 20 percent increase in imports from Mexico by 2021. In late March it was reported that COVID-19 threatened to delay the process of inspection of 23 Mexican beef plants by Chinese officials, as the Chinese government focused fully on COVID-19 efforts. Exporting to China was complicated because of delayed import processes, with other major beef producing countries, such as Australia, turning to the US to divert some of their Chinese-bound beef. With China now normalizing port operations, beef imports are going back to normal. Meanwhile, in the US processing facilities that are shutting down or altering operations are creating a severe bottleneck in the highly centralized pork supply chain. The beef supply chain is also under increasing threat as beef processing capacity has dropped by 27 percent due to altered or suspended operations at processing plants. While experts still expect supply of beef to hold up, the spread of COVID-19 over the next few weeks will provide the answer. As the Mexican supply chain remains relatively unimpeded, it could benefit from a greater temporary demand from its northern neighbor to offset falling domestic consumption. Different beef producing companies have been in talks with US importers to evaluate potential higher demand for certain Mexican meat products.