Mexican Cattle Industry Huge Supplier and Potentially Huge Competitor of U.S.Fri, 09 Aug 2013 17:35:47 CDT
Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel probably knows more about the Mexican cattle market than almost anyone else in America. He says there have been many changes over the years in the relationship of the supply chain and the markets. Among those changes has been the fact that Mexico is now the Number 4 supplier of beef to the U.S.
“That has a multitude of impacts in Mexico, obviously. It was concurrent with the development of the cattle-feeding industry. It was concurrent with the development of relatively large-scale packing facilities in many cases. And those things depended on the development of roads and transportation infrastructure, processing facilities and, really, the biggest change in the beef industry per se that supported all of this was the conversion of this industry from carcass-based industry just a few short years ago predominantly, now a heavily boxed-beef industry. It happened in the U.S. many years ago. When you go from a carcass-based industry to a boxed-beef industry you open up a whole new set of potential value because now you can direct different parts of the animal to those markets where it has the highest value. And that’s what happened in Mexico. And one of the results of that is they are shipping a significant amount of beef to the U.S.”
Peel says the Mexicans now have a broad feeding industry of their own that is similar to that in the U.S., but with significant differences.
“They don’t necessarily feed cattle the same way in terms of the carcass quality because they have different preferences; it’s a different market. And, so, quality is in the eye of the beholder and so it’s not necessarily the exact same kind of meat. I distinguish between what I call Mexican-fed beef versus U.S. beef. They’re different products. They do substitute for each other. They do compete in the marketplace to some extent, but they really are different products and so it’s a different market and something uniquely Mexican.”
Peel said that the Mexicans have never been happy with the prospect of the Country of Origin Labeling rule. He says for all practical purpose North America is really just one big market.
“We’re all in this together. It’s really just one market. These things divert attention, in my opinion, away from other issues that are probably more important, but, in the short run, they’re going to react to this. If we’re not willing to play nice, they will react to that.”
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