Retail chicken prices in Mexico will rise by 22.4 percent and the meat consumer price index will increase by 7.2 percent if the Mexican government implements duties on U.S. chicken leg quarter imports, according to a study released that assessed the likely impact of the duties on prices and inflation levels in Mexico.
The study, conducted by Dermot Hayes, Ph.D., professor of economics and finance at Iowa State University, was conducted in response to a 2011 move by three Mexican poultry companies who petitioned the Mexican government to begin an antidumping investigation of imports of chicken leg quarters from the U.S., claiming that U.S. companies were exporting leg quarters to Mexico at below-market prices. The Mexican ministry announced its preliminary results with proposed duties on U.S. poultry ranging from 64 percent to 129 percent.
The loss of this enormous leg market would affect the U.S. chicken industry and competing meats. Mexico is the largest customer of U.S. poultry exports. If these tariff rates are indeed imposed in Mexico’s final determination, U.S. exports of chicken leg quarters to Mexico would decrease from about 250,000 metric tons per year to 0 and would result in the loss of hundreds of U.S. jobs and a loss of $275 million annually for the U.S. poultry industry.
The Mexican poultry industry will benefit most from these duties, according to the study. “This industry has grown at a far faster rate than the poultry industry in the United States because middle class Mexican households prefer domestically produced fresh poultry,” said Hayes. “It is ironic that the expansion in the number of middle class Mexican consumers is due in part to the free trade agreement that prompted this dispute.”
A public hearing is scheduled for May 15–16 in Mexico City arranged by the Mexican Unit of Foreign Trade Practices about the Mexican anti-dumping investigation against U.S. chicken leg quarters. Expected to take part in the hearing are the petitioners in the case, U.S. exporters and Mexican importers. The hearing is one of the last steps before the Mexican Unit of Foreign Trade Practices renders its final determination in the case, which will have to be reached by August under Mexican law.