Mexico Citrus Annual - USDA FAS 2009

Mexico Citrus Annual 2009

Report Highlights: MY 2009/10 (November-October) production of fresh oranges is forecast at lower levels compared to the already low levels of MY 2008/09 as production areas, mainly the northern states, were affected by dry weather conditions throughout 2009. Mexican orange exports are forecast to increase slightly from MY 2008/09 as more demand is expected from the international market. Meanwhile, total MY 2009/10 production for Key and Persian limes is forecast at two million metric tons (MMT) due to expected better weather conditions. Grapefruit production for MY 2009/10 is also forecast to be slightly higher compared to MY 2008/09 due to acreage coming into production and expected better weather conditions.

Executive Summary: MY 2009/10 (November-October) production of fresh oranges is forecast at lower levels compared to the already low levels of MY 2008/09 as production areas, mainly the northern states of Mexico, were affected by dry weather conditions throughout 2009. Mexican orange exports are forecast to increase slightly from export levels of MY 2008/09 as more demand is expected from the international market. The final export figures will depend on U.S. demand. Total MY 2009/10 production for Key and Persian limes is forecast at two million metric tons (MMT) due to expected better weather conditions. Lime exports for MY 2009/10 are forecast to increase slightly compared to MY 2008/09 exports. Since exports depend heavily on international demand from Europe and the United States, the current financial situation will ultimately influence demand. Grapefruit production for MY 2009/10 is forecast to be slightly higher compared to MY 2008/09 due to acreage coming into production and expected better weather conditions. Production for MY 2008/09 was low as expected as northern areas were affected by dry weather conditions. Some fruit could not reach the fresh market due to quality issues, and therefore was sold for processing. Grapefruit production for MY 2007/08 was revised upward based on official GOM data. Reliable production numbers for frozen concentrate orange juice (FCOJ) are difficult to obtain since no official statistical data are available. According to industry sources, FCOJ production for MY 2010 (January-December) is forecast to decrease to 65,000 MT due to an expected lower availability of fresh fruit for the industry. Exports of FCOJ for MY 2010
are forecast to decrease compared to previous years due to lower availability of fruit. The expectation of better international prices and stronger demand could increase exports more than forecast. It is likely that dry weather conditions will continue to affect orange and grapefruit production from the northern states, mainly Nuevo Leon, Tamaulipas, and the northern part of Veracruz. Production from the other states is expected to be good. Persian lime production overall is likely to face fewer problems from the dry weather since a slight increase in production is expected to counterbalance the dryness due to more flowerings. Although citrus imports are not significant compared to production, it could be affected by the weakening of the Mexican peso relative to the U.S. dollar [1] and the economic crisis afflicting the Mexican economy.[1] The exchange rate used in this report was the average exchange rate of 13.50 pesos to the dollar, unless
otherwise indicated.

LEMONS/LIMES, FRESH Persian and Key lime exports for MY 2009/10 are forecast to increase slightly compared to MY 2008/09 exports. However, exports depend heavily on international demand from Europe, the United States and the current financial market. Exports for MY 2008/09 remain unchanged from previous estimates, which are slightly lower compared to the previous marketing year due to decreased demand from international markets. The spring Persian lime harvest usually begins in the month of May, but in 2009 it began earlier in March, and since Europe commanded better prices (US$18/10 lb box), exporters shipped to Europe first. U.S. prices were low at that time due to economic recession and export prices improved by May (US$20/40 lb box). According to exporters, a good price for Persian limes is about US$40/ 40-lb box. Exports for MY 2007/08 were revised upward, due to stronger international demand than previously anticipated. According to producers, Persian limes from Mexico supply about 40 percent of the U.S. and Canadian markets. However, lime producers are expanding into new markets in Japan and Europe. International prices for Persian limes reached US$20-$30 per 40-pound box at the peak of winter but started at US$5 to $7 per 40-pound box in October/November. Lime imports continue to be minimal due to ample domestic supplies. MY 2009/10 imports are forecast at 1,000 MT. Data for MY 2007/08 and 2008/09 remains unchanged. Mexico's tariff rate on imported limes from the United States is zero under NAFTA.

Policy: CITRUS GREENING The Secretariat of Agriculture (SAGARPA) published an emergency regulation in the Diario Oficial (Federal Register), on July 8, 2009, that establishes a monitoring program to detect the anticipated introduction and dispersion of Huanglongbing (citrus greening or HLB). All domestic production of propagative vegetative material of citrus will be conducted under controlled and protected conditions complying with NOM-079-FITO-2002. In case of detection of HLB in any of the products listed in the regulation, SAGARPA will implement several actions to limit and control the point of infection along with other local plant health offices, state plant health committees, and the production chain for citrus and sweet and Key limes (See Report MX9043). Mexico is currently surveying a range of areas for the presence of the Asian greening bacterium, Candidatus Liberibacter asiaticus, in symptomatic host plants throughout the country.
Similarly, USDA and Mexico are conducting a joint suppression campaign aimed at reducing populations of the insect vector (Asian citrus pysllid - Diaphorina citri) along the United State/Mexico border. In fact, collaboration efforts recently expanded to include Central American countries to join efforts to control this pest. Although the Asian citrus pysllid is thought to be widespread throughout Mexico, there have been relatively few positive detections of citrus greening, and only in the states of Yucatan and Quintana Roo on the Yucatan Peninsula. The current trade impact is negligible since fruit are not considered a disease vector.

Marketing: The Mexican market is more sensitive to price than to quality. This is one of the main reasons for limited exports of U.S. citrus products. Because of the excellent quality, U.S. oranges command a price four to five times higher than does Mexican fruit. Some attempts have been made by U.S. firms to enter the market, but they have had limited success because of strategies emphasizing quality rather than price. Due to phytosanitary restrictions, only citrus fruit coming from California, Texas, and Arizona can be exported to Mexico.
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