Mexico to Reduce Reliance on Global Imports by Boosting Poultry Production

Pilgrim’s Pride Set to Invest $1.3 Billion in Infrastructure

The path towards national prosperity is increasingly trending in the direction of self reliance. The United States isn’t the only country buffering against foreign imports while simultaneously turning an eye inward on domestic production opportunities.  Mexico too is putting their Mexico Plan into action in a strategic attempt to move up the ladder of the world’s largest economies. Self reliance will be achieved in part by ramping up agricultural production in the country which is intended to add a layer of food security while also providing valuable employment opportunities. 

Mexico’s recent stance on food sovereignty revolves around a close examination of what the country can produce efficiently and encouraging citizens to primarily consume what the nation produces.  The return to old food systems favoring beans, corn and coffee will also include increased production in the poultry sector. 

Pilgrim’s Pride, majority-owned by JBS, is set to invest $1.3 billion in poultry production in Mexico. The investment will fund the building of a brand new incubator facility as well as upgrades to existing infrastructure. All totaled, the expansion of the poultry sector could create some 4,000 jobs.  

Chicken is a vital part of the Mexican diet as it has a longstanding history of being the most affordable protein option. Domestic demand has been on the rise forcing reliance on imports, particularly from the United States.  Prices for chicken have risen over the last year as demand strained supply.  Keeping prices affordable means increasing production capacity or importing.  Over the course of four years Mexico hopes to reduce chicken imports by 35%, favoring a plan to scale up domestic production.

Pilgrim’s Pride says their decision to invest in building and updating poultry infrastructure stems from what they believe is organic growth opportunity.  Unwavering domestic demand, a need for both jobs and geographic economic stability as well as a commitment to support national industry appear to amount to a risk free endeavor.  And, one that benefits both Pilgrim’s production goals and Mexico’s economic goals.

Will Pilgrim’s Investment Bring Economic Stability?

Perhaps the greatest benefit of the partnership is not increased quantities of domestically raised chickens, but the fact that new facilities and infrastructure projects mean new jobs.  Mexico believes this could be economically stabilizing in regions of the country that have historically lacked valuable employment opportunities.  

While the United States and Mexico continue to negotiate trade relationship dynamics the poultry partnership could be seen as a move by Mexico to disentangle the very intertwined supply chains they have with the United States.  The new incubator will be built in the southern part of the country close to feedstocks, but also close to other trading partners and ports. Pilgrim’s has said they are very happy with potential profit margins and aim to double production capacity in the southern region.

Despite the fact that the Mexico Plan intends to use self-reliance to prompt prosperity, Mexico seems to be orienting its trading economy to allow for new trade partnerships. Mexico has standing ties to China and recently negotiated free trade agreements with the EU.  Though neither hinges on the poultry industry, it's worth considering that Mexico’s long-term plan could begin with national prosperity and end with a secure ranking among the largest global economies that affords them greater access to foreign markets?

Mexico has traditionally avoided stepping into the role of global super power, and yet they could be a key player in commodity trading as the flow of trade continues to reshape.  Historically, Mexico has fallen in line behind Brazil and the United States, but if the national prosperity plan succeeds, Mexico could grow to compete with both countries.  At the very least they hold a strategic geographic location for trade.

Agricultural professionals in Mexico fear the current food sovereignty perspective could restrict their access to foreign markets initially and leave them confined to domestic oversight.  It's a method they hope will not lead to financial instability and restrict them from adopting new technologies. More agricultural jobs in rural areas doesn’t automatically mean economic stability.  

In the short term, demand for chicken and chicken products are expected to increase in Mexico.  Infrastructure projects are not expected to be completed and fully operational until 2030.  Demand for U.S. poultry could hold steady if Mexico aims to keep chicken affordable.  Mexico imports approximately 700,000 metric tons of chicken from the United States every year.  If they were to halt or reduce imports, U.S. consumers might absorb the excess supply and enjoy cheap prices. Or, the United States could look to the EU, Japan or Saudi Arabia to offset export losses. If Mexico detangles itself from U.S. trade they could look to Brazil to fill supply gaps until capacity is up domestically.