Mexico opens chicken import quota after inflation spike

MEXICO CITY Wed May 15, 2013 3:35pm EDT

Related Topics

MEXICO CITY May 15 (Reuters) - Mexican officials said on Wednesday it would exempt 300,000 tonnes of chicken imports from tariffs in a bid to blunt steep price increases and tame a spike in inflation.

Economy Minister Ildefonso Guajardo said the exemption on tariffs on imports would include whole chickens as well as chicken parts. The government is also dropping tariffs on tomatillos and limes to zero, he said.

An avian flu outbreak in Mexico has pushed up chicken prices, while bad weather hit tomatillos - a main ingredient in local green sauces - and a fruit disease affected lime crops.

A 17.25 percent increase in fresh food prices in April this year compared to April 2012 drove Mexico's annual inflation rate to 4.65 percent, above the central bank's 4 percent tolerance ceiling for the second month in a row.

Political pressure is rising on the government to try to contain the spike in consumer prices. This is the first price shock that President Enrique Pena Nieto has faced since taking office last December, although Mexico last year cut tariffs on egg imports after a similar price surge.

Mexico has a free-trade deal with the United States and officials said the measure was meant to spur imports from other countries, such as Brazil.

"We understand why (the government) would take such action ... although I don't really think it's necessary and I'm not sure how competitive products from other destinations further away from the U.S. will be in the Mexican market," said Jim Sumner, president of the USA Poultry and Egg Export Council, the main U.S. export organization for chicken.

Mexico's economy ministry last year ruled that U.S. poultry exporters sold chicken legs and thighs in the Mexican market for below their cost of production, an unfair trade practice.

However, Mexico refrained from imposing any retaliatory measures due to an avian flu outbreak that caused a jump in consumer prices last year.

FILED UNDER: