Government Defends Move to Reduce Mexico's Consumer Food Costs Jean Guerrero - MarketWatch
go to original September 20, 2012

MEXICO CITY - Mexico's Economy Ministry is butting heads with agricultural industry groups once more after its latest move to reduce consumer food costs.

Earlier this week, the ministry defended its decision last week to reduce import tariffs on vegetable oil, which the Confederation of Industry Chambers, or Concamin, had criticized.

The ministry said in a press release that last week's decision was made "in benefit of all Mexicans."

The ministry said Mexican industry failed to fulfill commitments made in 2010, such as helping domestic production and avoiding price increases, which they had agreed to that year in exchange for an increase on vegetable oil import tariffs. That 2010 tariff increase came after Mexico had cut tariffs on various food products and ingredients in 2008.

Concamin said the ministry's decision to lower import tariffs on vegetable oil discourages investment in the sector.

Mexican food producers have had a number of disagreements with tariff decisions made by the ministry.

In August, companies such as poultry producer Industrias Bachoco SAB (IBA, BACHOCO.MX) weren't happy with the Economy Ministry's decision to postpone the imposition of antidumping duties on imports of chicken parts from the U.S., following an investigation in which it found U.S. exporters to be at fault.

The government argued it didn't want to impose the tariffs on chicken legs and thighs while the effects of a bird flu outbreak in the top egg-producing state of Jalisco was distorting domestic egg and chicken prices.

Other recent measures by the ministry include lifting egg import tariffs for all countries, and lifting egg labeling requirements for exporters who sell eggs to Mexico.

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