TEX-MEX.ORG...... News Flash

2/19/99

Asociaciòn de Procesadores Y Exportadores De Frutas Y Vegetales en General, A.C.

Broccoli and Cauliflower Market Update

While it has now been 13 months since the worst winter freeze in more than 100 years swept across Central Mexico and 3 months since the worst floods in memory washed across the Bajio Valley, we are pleased to advise you that, beginning February 1, we will finally resume "normal" production. This is a most welcome change after a year of freezes, drought, hail and floods!

February - Mid April Broccoli Production

While a late winter freeze similar to February 1998 is always possible, we are currently anticipating a "normal" level of production for the remainder of our Bajio processing season. With insect populations projected to be within normal population levels for this period, both quantity and quality should meet member production targets.

Mid April - May Broccoli Production

Since all unharvested plants must be plowed under on May 1st as required by our industry Veda Agreement for controlling Diamondback moth populations, broccoli production will begin to drop sharply April 15th as no new fields will come into harvest. On May 1st all production will cease, except for very limited production in areas distant from the Bajio. Summer production will start June 1st when produce from the northern growing region gradually begins to come into harvest. The six-week period of very limited production will draw down Spring inventories and, most probably, create a "normal" summer market.

Cauliflower Production

The September and October floods seriously damaged our 1998-99 cauliflower crop. Since this is a seasonal (September through February) rather than a year-round processing season, tight inventories and firm pricing should be anticipated.

Labor Market

Due to the gradual phasing in of NAFTA and a 1.9% unemployment rate in the State of Guanajuato, inflation adjusted wages are moving sharply higher. Since we are dependent on hand labor in both the fields and plants, significant wage increases are a fact of life that Mexican processors must adjust to as the huge disparity between U.S. and Mexican labor rates will, most certainly, substantially narrow over time. This increase coupled with sharply escalating taxes as the Mexican government grapples with less than $10 per barrel oil prices (35% of Mexican government revenues are generated by state-owned oil production) is and will continue to put significant pressure on industry production costs.

On behalf of all of our members we would like to thank you once again for you understanding and support during the El Niño and La Niña climate cycles as this has been the most difficult period for the industry since broccoli was first introduced to the Bajio Valley 30 years ago.

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