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Mexico Sweet on U.S. Peaches and Plums
By Lourdes Guzman and Dulce Flores
New trends in Mexico’s retail
sector spell opportunity for patient U.S. orchardists interested
in exporting stone fruits such as peaches and plums.
The stone fruit market has potential for slow but steady growth over the next two years, in accordance with anticipated expansion of retail outlets.
Not only have many U.S. retail chains moved south to establish stores, but others have joined forces with Mexican-owned chains.
Larger stores are increasingly the trend in Mexico as discount stores and mega-markets take root and out-compete less efficient corner grocery stores.
The results are obvious to consumers. Ten years ago, fine fruits could only be found in upscale neighborhoods, whereas today, good-quality stone fruits are commonly available in supermarkets.
Currently, the main barrier to increased
imports of stone fruit are phytosanitary entry restrictions. But
this is changing, thanks to the work of USDA’s Animal and
Plant Health Inspection Service, together with the Mexican
Department of Agriculture (SAGAR) General Direction of Plant
Health. With the continuing implementation of the phytosanitary
work plans, access is certain to improve, and so will the cost
and selection of the products.
Competition from local production is strong, especially for peaches, with nationally organized peach growers and scattered plum growers aggressively adapting to price pressure from imports. Competing tropical products are also on the market in significant amounts and at low prices.
However, limited refrigeration, limited technical capacity and lack of product knowledge can hamper the process.
Then, too, there still remain basic trade concerns about Mexico’s mandatory fumigation treatment for peaches and nectarines.
California has a distinct advantage in this market, given its geographic proximity, length of export season and distinctive grade availability. Location keeps costs down and helps with consumer acceptance and awareness. Season length puts California products into the market when locally grown fruit is unavailable. And California’s grading options (both No. 1 and utility grades) give shippers the ability to supply products to more sectors.
Fuzzy Distinctions: Peaches and Nectarines
Due to the limited domestic production of high-quality peaches, not to mention the reduced import tariffs resulting from the North American Free Trade Agreement (NAFTA), the market potential for U.S. peaches is very promising, especially in the high-income segment of the market.
Mexico and Chile are the main competitors of U.S. peaches, although Chile’s production season occurs when it’s winter in the United States and Mexico. Both crops are price-competitive. To date, neither nation has been active in market development.
Mexico’s top-quality peaches come mainly from the state of Chihuahua. The quality is comparable to U.S. peaches, the fruit is generally well-packed and branded, and the distribution channels do an adequate job. Thus, U.S. peaches face tough competition for the Mexican market during the peak production season.
A strategic advantage, however, presents itself in the shortness of Chihuahua’s production season: June through September.
Nectarines, a new product in the Mexican market, are imported from the United States and Chile.
According to the Banco de Mexico, Mexican imports of peaches and nectarines totaled $10.2 million in 1995; $9.1 million in 1996; and $14.4 million in 1997. In 1998, these imports were estimated at $12 million.
Plum of the Market
Mexico itself is the only direct competitor for U.S. plum sales, although Chilean products enter the local market during Mexico’s winter.
Annual plum production in Mexico is around 80,000 tons. Most domestic plums are from non-irrigated orchards, resulting in low product quality and short product shelf life. Given these conditions, U.S. plums have a good market opportunity due to their high quality–but price is still an important factor in the Mexican market.
Superior product quality and lower costs in getting the product to market present significant opportunities for U.S. exporters to raise their market share.
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Lourdes Guzman is a marketing specialist at the U.S.
Agricultural Trade Office in Mexico City. Tel.:
(011-525-280-5291); Fax: (011-525-281-6093); E-mail: ATOMexico@fas.usda.gov
Dulce Flores is an agricultural specialist at the same location. Tel.: (011-525-209-9100); Fax: (011-525-208-2115); E-mail: AgMexico@fas.usda.gov
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