An analysis of U.S. chicken exports to Mexico

Mexico is an important market for U.S. chicken product exports, but it is also a complex market due to changing sanitary restrictions and multiple domestic and trade policies. Mexicos demand for chicken has outpaced its domestic production, and poultry meat imports increased at an average rate of 8% a year from 2000 to 2005. More than 90% these imports come from the U.S. In this study, we examined impacts of tariff rate quotas from NAFTA and from a Voluntary Safeguard Agreement on U.S. chicken exports to Mexico. Excess supply and demand equations were estimated using three stage least squares. The results indicate that the level of above-quota tariff rates had a significant impact on U.S. prices of chicken exports to Mexico. We also found that U.S. chicken imports increased significantly in response to rising middle-class incomes in Mexico, and that there may be a significant potential for domestic Mexican production to displace some of the U.S. imports if domestic producers can expand output.