USDBC MEXICO MONTHLY REPORT AUGUST SPRING-SUMMER BEAN PLANTING SEASON PROGRESS REPORT

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1 USDBC MEXICO MONTHLY REPORT AUGUST SPRING-SUMMER BEAN PLANTING SEASON PROGRESS REPORT SITUATION UNTIL JULY 30, 2012 State BEAN PLANTING PROGRESS REPORT 2012 SPRING SUMMER CYCLE IRRIGATED+DRY LAND Surface (HA) Production (MT) Yield (MT/HA) programmed planted harvested damaged programmed obtained programmed obtained AGUASCALIENTES 10,767 7, , BAJA CALIFORNIA BAJA CALIFORNIA SUR 243 1,796 1, , CAMPECHE COAHUILA 5,452 1, , COLIMA CHIAPAS 71,575 75,744 41, CHIHUAHUA 128, , , DISTRITO FEDERAL DURANGO 223, , , GUANAJUATO 93,118 82, ,944 1, GUERRERO 10,007 8,272 7, HIDALGO 34,363 30, , JALISCO 15,919 15,386 15, MEXICO 10,224 9,824 8, MICHOACAN 3,864 2,221 4, MORELOS 1, , NAYARIT NUEVO LEON 2, , OAXACA 38,100 33,898 24, PUEBLA 61,636 62, , QUERETARO 19,061 9, , QUINTANA ROO SAN LUIS POTOSI 123,865 83, ,274 49, SINALOA 2, , SONORA 3,663 4,251 1,457 4,244 3, TABASCO TAMAULIPAS 4, , TLAXCALA 5,652 5, , VERACRUZ 13,588 11, , YUCATAN ZACATECAS 574, , , TOTAL 1,460,358 1,128,853 4,989 7, ,989 9, REGION LAGUNERA 10,605 3, , Preliminary Information Source: SIAP SAGARPA ZACATECAS.- Our contacts informed that the final planting figures in the state reported 535 thousand hectares in dry land from which 90% were planted on time for optimal development. Precipitations have been favorable in general and the plants development is very good in most of the region, except for localized areas in Fresnillo and other parts of the state. It is expected that it will continue raining in the remaining days of September and for October the forecast shows that they will receive precipitations higher than average. USDBC Mexico August 2012 Report 1

2 If precipitations continue, the bean production could reach 270 thousand MT. Preliminary numbers indicate that 35% percent will be Pintos (Saltillo mainly), 50% Black beans and 15% Flor de Mayo/Junio and Bayos. At the end of September they will resume the cutting in 5% of the surface planted with Pintos and the remaining 30% of the pintos will be ready to cut in mid-october. Black beans will be ready to be cut at the end of October and early November. The irrigated beans planted are Flor de Mayo and Junio and Media Oreja which are expected to reach prices around 14 pesos per kilo. In the case of black beans it looks like its price dropped to 8 pesos per kilo. In dry land there is no reference price to this date. Although the official expected prices are: 8 pesos per kilo for Black beans and 10 pesos per kilo for Pintos and Flor de Mayo/Junio, These prices will depend on the U.S. bean production. DURANGO.- Our contacts in the state informed that final bean planted surface in the state is 236,643 hectares which are developing in optimal conditions and are now in the blossoming phase. Moisture conditions are good and the forecast is favorable for September with good precipitations which will guarantee a good yield. The probabilities of early frosts are remote. It is estimated that harvesting will resume on October 15 th and ends in November 15 th. Prices are expected to be between 10 and 12 pesos per kilo. CHIHUAHUA.- Contacts in the state reported that the final bean planting is 124,500 hectares (13 thousand irrigated) of Pinto beans and they are expecting a production of 100 thousand MT. The beans are in the blossoming phase at this moment and rainfall has been getting scarce in the last weeks, which is causing the appearance of grasshopper plague in 10% of the surface. Irrigated beans will be ready to start cutting by the end of September and early October. The weather forecast indicates that they will continue to receive precipitations in the second week of September however isolated, increasing the risk of plague in some areas. Prices are still high in these state over 22 pesos per kilo to the producer and they expect that if they have a good production, prices could stabilize at 12 pesos per kilo. COMPARATIVE CHART PLANTING PROGRAM VS. PLANTED SURFACE SPRING SUMMER Programmed Planting HA Planted Surface HA BEAN CROP Zacatecas 524, , , , ,850 *535,000 Durango 229, , , , ,212 *, Chihuahua 130, , , ,913 92,612 *124,500 Chiapas 75,729 72,361 71,575 70,594 76,892 **75,744 San Luis Potosi 127, , , ,906 62,214 **83,938 Guanajuato 86,779 89,099 93,118 91,726 85,688 **82,554 subtotal 1,174,002 1,252,180 1,215,073 1,291,033 1,021,468 1,138,379 Other States 260, , , , ,650 not available Total 1,434,588 1,512,782 1,460,258 1,557,643 1,250,118 not available *Final planting numbers until September 6 th, 2012 **Preliminary numbers until July 30 th 2012 USDBC Mexico August 2012 Report 2

3 CENTRAL MARKET PRICES AND SALES ANALYSIS BY USDBC USDBC Disclaimer: In the following section the USDBC Mexico office analyzes dry bean prices from SNIIM reports. In addition, the USDBC Mexico office place calls to the Mexican trade to complement the information. The USDBC will not be responsible for third party transactions based on this report. Comments from the Industry: The market s conditions continue to be slow. Sales have not reacted to the supposed bean shortage because of the high prices driving down the consumption. With the better than expected expectations of the up-coming crop in Mexico and in the U.S. and the beans brought from China and Argentina, some people from the trade are concerned about their U.S. bean inventories purchased at higher prices. Following is a chart with the accumulated imports made in the January-August, 2012 period under the bean quota permits assigned this year to bring beans from other countries then NAFTA and Nicaragua: JANUARY-AUGUST ACCUMULATED IMPORTS FROM BEAN QUOTA PERMITS FROM COUTRIES OUTSIDE NAFTA & NICARAGUA MERCHANDISE Commercial COUNTRY OF AMOUNT Value PERIOD TARIFF CODE DESCRIPTION UNIT ORIGIN IN TARIFF UNITS (USD) (Kg) "Black beans, except the included in tariff / Frijol negro, excepto lo comprendido en la fracción " Kg ARGENTINA (REPUBLICA) 13,138, $11,371, January-August 2012 "Black beans, except the included in tariff / Frijol negro, excepto lo comprendido en la fracción " Kg BOLIVIA (REPUBLICA DE) 775, $658, January-August Other beans/ Los demas Kg BRASIL (REPUBLICA FEDERATIVA DE) 237, $130, January-August 2012 "White beans, except the included in tariff / "Frijol blanco, excepto lo comprendido en la fracción " Kg CHINA (REPUBLICA POPULAR) 1,370, $1,448, January-August 2012 "Black beans, except the included in tariff / Frijol negro, excepto lo comprendido en la fracción " Kg CHINA (REPUBLICA POPULAR) 11,474, $8,814, January-August 2012 TOTAL 26,996, $22,423, Wholesale Prices Report US Black beans prices in August, again, registered a slight decrease of 2.70% passing from to pesos per kilo in Mexico City, however continued at 21 pesos per kilo in Monterrey and in Guadalajara there was also a slight decrease of 3% passing from to pesos per kilo. Mexican black beans continued at prices from 16 to 18 pesos per kilo. US Pinto beans: U.S Pinto prices registered again a decrease of 5.88% passing from to 24 pesos per kilo in Mexico City Central Market and in Monterrey these also had a reduction of 2% passing from to 25 pesos per kilo. National pintos also decreased 5 percent passing from 25 to USDBC Mexico August 2012 Report 3

4 Calzada de Chabacanos 4, Residencial Calacoaya, Atizapán de Zaragoza, Estado de México, pesos per kilo. Peruanos, Mayocoba, Azufrados from Sinaloa, during August, continued very high around pesos per kilo in Mexico City, Monterrey and Guadalajara. Bayos, Canarios, Flor de Mayo and Flor de Junio: these preferred Mexican varieties continued in August at very high prices around 30 pesos per kilo in Mexico City and Guadalajara central markets INTERNATIONAL US DRY BEAN CONGRESS OPENS FOR REGISTRATION You can now register for the 2013 US Dry Bean Congress at Los Cabos, Baja Mexico taking place February 7th-9th, 201 at the Grand Fiesta Americana Cabo San Lucas To register and interact, please visit: twitter: usbeancongress facebook: US Bean Congress USDBC Mexico August 2012 Report 4

5 MEXICO NEWS CLIPPINGS: DROUGHT AND OTHER IMPORTANT AG NEWS USDBC Disclaimer: In the following section the USDBC disseminates information published in Newspapers and Magazines related to beans. The statements or numbers shown in each article are not necessarily in agreement with the USDBC. Bean Planting Increased 35% El Siglo De Durango September 12, 2012 Durango.- The bean planting could reach yields of 1 MT per hectare which brings good expectations for the producers that planted closet o 50 thousand hectares more than the expected. Andres Fernandez, state leader of the bean producers in the Llanos region commented that there is great optimism about the possible production this year. In the beginning they were expecting to plant 180 thousand hectares and they finally planted 235 thousand hectares, this is an increase of 30 percent thanks to the good amount of rainfall received in July and August. A bean hectare in Durango, yields 750 kilograms in the good times however the average is between 500 and 600 kilos. But now, with the rains and moisture they are expecting to reach 1 MT per hectare Por lo general, una hectárea de frijol en Durango está arrojando una cosecha buena de 750 kilos, y una regular de entre 500 y 600 kilos; pero ahora, con las lluvias y la humedad se espera alcanzar la tonelada por hectárea. With these figures, it is estimated that they will harvest around 200 thousand MT of beans if the rainfall continues during September and the frosts do not show up before the harvest. THEY ALSO EXPECT THE BEST PRICE The bean producers leader also commented that they expect that the price paid to the producer will continue to be good, it reached 25 pesos per kilo because of the shortage, and we know that that price will not remain, but since there is not much national supply, I think there will be a good price. This is why they have been talking to the producers so right after the harvest they should wait a few weeks to get a good price and not get desperate to sell as fast as possible because they will fall into the intermediaries claws Zacatecas Dams Collected Enough Water for Agricultural Irrigation: CONAGUA NTR Zacatecas September 12, 2012 Zacatecas.- Because until this date the state s dams register a global water collection of 43%, it will be possible to establish an irrigation plant when using most of these, except for the Leobardo Reynoso and Santa Rosa dams, since these have not been favored with the precipitations. Enrique Moran CONAGUA (National Water Commission) Director in Zacatecas, informed that this year it was possible to plant more than 90 percent of the dry land beans, thanks to the rainfall received in May and June, as opposed to 2011 when only 50 percent or the agricultural land were prepared to plant. He said that the producers that can use the underground concessional water did not have any problems and were actually able to get a good production. He explained that in the case of the irrigated hectares in District 034 they were able to use two of the six modules because of the low collection of the dams and that the even opted to help for technification of some particular wells, which helped to resolve the problems caused by the lack of collection in the Leobardo Reynoso and Santa Rosa dams. USDBC Mexico August 2012 Report 5

6 The government official added that this year, the rainfall collection is close to the historic median however, they must wait until September 30th in order to establish the irrigation plan. El funcionario agregó que este año la captación pluvial ya se está cerca de la media histórica de lluvias, no obstante hay que esperar hasta el 30 de septiembre para establecer el plan de riego. Durante los primeros días de octubre será dado a conocer el número de hectáreas que será posible irrigar a través de dicho esquema. Drought is Over in Guanajuato El Sol del Bajío September 10, 2012 APASEO EL GRANDE, Guananjuato.- CONAGUA State Director Roberto Castaneda informed that at this point in the year, they can tell that the drought that occurred in Guanajuato since 3 years ago has been eradicated with the rainfall received mainly in July and that are expected to continue until October. He said that until July this year the obtained 60 percent of the rainfall over the median in the state, and in August they received less than that, however, with the amount received last month they have now 74 percent. Roberto Castaneda said that this month they are expecting to receive approximately 107 mm of rain, and if this is true, they would have an excellent dry land season, and they are also expecting to continue receiving precipitations in October for up to 54 mm, which summed in total would be 600 mm which is over the median for the state of Guanajuato. In the forecast is true, 80 percent of the dams water will be recovered and it would be a good result given the conditions in which these were he concluded. Expecting a Good Bean Crop El Siglo De Durango September 6, 2012 Durango.- At the expectance of a good bean production of 130 thousand MT of beans in the state, it is necessary to have a good trading scheme that provides certainty to the producers about the prices in order to avoid the price drop said the local Legislator Marcial Garcia. Resources: the supports for the producers must be delivered on a timely fashion so the product can be in the market at the best conditions possible. The problem affecting the productive chain is being analyzed since the past period with the producer s organizations in the states of Sinaloa, Nayarit, Durango, Chihuahua and Zacatecas, which produce 60 percent of the beans in the country and the agricultural sector s officials. Similar to other agricultural products in Mexico, the main problem that bean producers have to face is the trading phase. He considered a priority to take care of this issue since soon the producers will be offering their product and according to SAGARPA they are expecting to harvest 130 thousand MT as they did in LOCK He said that the price must be established based on the supply and demand and the authorities must be alert to avoid the drop of the price caused every year by the intermediaries. Adjustments in the Price of Beans USDBC Mexico August 2012 Report 6

7 (By J.Antonio Manriquez-FIRA*) El Economista September 6, 2012 After an atypical year, it looks like the bean market is starting to stabilize. At least that is what the wholesale prices have indicated in the last three months at the Mexico City Central Market. According to the National Markets Service (SNIIM), all of the bean varieties except for the Peruano beans show a price reduction. Nevertheless, the prices of 30pesos per kilo for Flor de Mayo and Flor de Junio beans are still perceived as high for the consumer. Prices for black and pinto beans are at 18 and 25 pesos per kilo respectively. In 2011 the drought affected the bean production in the states of Zacatecas, Durango and Chihuahua in the Spring-Summer Cycle, in which plantings are almost exclusively in dry land. The 2012 bean crop will be obtained until the months of November and December, which means that we are currently in the most critical phase of supply. However, the market is interpreting as favorable the production expectancy since the prices have not increased. On the other hand, according to the USDA s Economic Research System (ERS), the bean planting surface in the United States increased 38% in comparison with last year because of the higher market prices. Despite of it, the planted surface is still 14% smaller in comparison with the planted in 2010 because of the competition vs. other crops such as corn and soybeans that also have good prices for the producers. According to SIAP-SAGARPA, the planting progress until July for the 2012 Spring-Summer Cycle is 1,129 million hectares, 10% smaller that the reported planted in the same cycle and month in This year the rainfall behavior is favorable for the bean growing cycle. In conclusion, we can say that the productive potential of the beans is recovering and the price of the product will decrease, but it is possible that higher prices to those of 2010 will be observed. In this case, it is important to remember that because of the seasonal aspect of the product, the impact will be felt in *J. Antonio Manríquez Núñez is a Specialist at the Sub-direction of Sectorial Evaluation at FIRA (Established Trust Related to Agriculture Gov Agency). This opinion is responsibility of the author and not necessarily in agreement with FIRA s official point of view. 80 Thousand MT of Beans Saved Reforma September 3, 2012 After an exhaustive insecticide application in more than 100 thousand bean hectares affected by a grasshopper plague, the state government of Chihuahua assured that they saved 80 thousand MT of beans. In regards with the grasshopper plague in this entity, the State s Rural Development Secretariat is informing that the bean areas are saved because of the actions implemented by authorities and producers, said Rogelio Nunez from SAGARPA. He said that the announcement of grasshoppers can be alarming but in the bean areas it is under control. The government official added that they are expecting a production of around 80 thousand MT since they were able to plant 100 thousand hectares, and if it is true that there are reports of damage in some fields, the affectation is minimal. At this moment, -he clarified-, the growing phase the beans are in is not likable for the grasshopper since these like the earlier phase of the plant, being this a natural control against the plants USDBC Mexico August 2012 Report 7

8 predators He informed that the government will continue with the alert to prevent a possible plague in the later planted beans. Three New Bean Varieties Cleared Debate August 27, 2012 Sinaloa.- Azufrasin, Azufrado Janasa and Aluyori are the names of the three new bean varieties cleared by the Valle del Fuerte Research Field (CEVF) in the benefit of the bean producers in this state. INIFAP s (Forestal and Ag Research Institute) Representative in this region Franklin Rodriguez highlighted the aspects of the new materials such as the higher yield potential of more than 20 percent in comparison with the traditional varieties. The new seeds are the result of years of research and experiments done by specialists with the purpose to improve the number of varieties in the benefit of the producers in Sinaloa. Some of the characteristics of Azufrasin is the higher production potential of 21 percent vs. the Azufrado Higuera, its tolerance to diseases such as the golden tile, and blithe, also because of its growth habits, it can escape from the white mold. The Azufrado Janasa showed yields over 19 percent higher in comparison with the Azufrado Higuera and as the Azufrasin, it is tolerant to golden tile and regular tile, blithe and white mold. The Aluyori variety is a while bean alubia type that represents a good alternative to diversify the array of bean varieties, which also surpasses the regional Azufrado taste is very similar to the traditional bean and a good option for the export markets. Agricultural Cycle at Risk Because of Lack of Rains: CNC El Sol de Durango August 27, 2012 Durango, Durango.- Because of the considerable lack of rainfall, next year s agricultural cycle could be at risk of having less water capacity since the Lazaro Cardenas and Francisco Zarco dams are not recovering the water spent of 950 million cubic meters in The National Farmers Confederation (CNC) Leader Alfredo Ordaz warned that although they are receiving some rain, these are not enough to recharge the dams which puts at risk the next agricultural cycle. He stated that the severe drought affected the live stock and killed at least 80 thousand beef and 30 thousand goats and affecter 35% of the crops, provoking the producers to use extraordinary irrigation. The local legislator said that there could be problems in the future since they have only recovered 250 million from the 950 million cubic meters of water spent, bringing uncertainty for The dam is at 32% capacity at this time. Ordaz said that for the moment, there is no other option but to wait for storms in this season in the region, because the weak precipitations received have not been a solution to this problem. Surpasses Size, Whiteness and Cooking to Blanco Sinaloa Which is Considered the Best Chickpea Debate August 26, 2012 Culiacán, Sin.- Success in concluding the research phase of the new seed variety for a chickpea produced in the Valle de Culiacan Research Field called Jumbo and that will be planted USDBC Mexico August 2012 Report 8

9 commercially in the cycle, informed the VP of the National chickpea Producers and Exporters UNPEG Jaime Guajardo. We are working with the new variety Jumbo, and we are about to register it but we still need one more period to launch it commercially, so we expect to do it for the cycle, no doubt it will be well accepted since it is similarly corrugated and has a much better presentation than Blanco Sinaloa. He highlighted that the international markets prefer the Sinaloa chickpea because of its quality, so the doors will be open for the new variety. Drought Could Affect Sinaloa in 2013 Debate August 26, It happens every five years Los Mochis, Sin.- It is very possible that in 2013 the drought will generalize in the whole state, warned the Water Commission CEAPAS local official Antonio Perez. He explained that every five years average, this type of phenomenon happens in Sinaloa and it means that a more important investment in water for agriculture is needed. Every five years Sinaloa experiences a generalized moderate to extreme drought and for 2013 it is expected. We are working on infrastructure to face the situation UNPEG Proposing to Plant 95 Thousand Hectares with Chickpeas Linea Directa August 24, The market lacks of inventories reason why it is possible to plant this surface and obtain good prices in the export markets Culiacán, Sin.- The market expectation for chickpeas are favorable for this next cycle because of the low inventories in the world. For this reason it will be possible to plan on planting 95 to 100 thousand hectares of this crop said Jaime Guajardo VP of the National Chickpea Producers and Exporters in Sinaloa (UNPEG). UNPEG has selected the seed; all that was produced this year will be consumed this cycle and I think it will be a good alternative for chickpeas Guajardo said that they have the seed for planting although not certified because the recovery of the frosts in 2011 just started. Planted Thousand Dry Land Hectares in Zacatecas (excerpt) El Sol de Zacatecas August 20, 2012 Zacatecas, Zacatecas.- The Ag and Livestock Development State Secretary Enrique Flores indicated that in Zacatecas they planted 874,296 dry land hectares representing 85% of the total planting program of 102 thousand hectares in this cycle. A year ago, at this time they had only planted 437 thousand hectares late, out of the planting season. In regards with the beans, this is the predominant dry land crop in this state, making them the leader producer. They were able to plant 487 thousand bean hectares representing 90 percent of the programmed surface. USDBC Mexico August 2012 Report 9

10 If Zacatecas i sable to harvest this crop, they will be again the leading producer of black beans mostly, since there is a reordering of the planting of this legume so there is no speculation in the market. Enrique Flores indicated that today, there seems to be good conditions, that it was planted on time, which leads to believe that there will be a good yield and there will be good crops. These 874 thousand hectares planted were possible by the strong will and work decision of the producers in Zacatecas, who can be seen 2 4 hours working with their tractor, planting and taking advantage of the moisture. It is known that Zacatecas accounts with good equipment and that is why the producers must take immediately advantage of the present moisture. Planted 360 thousand Hectares in the State El Siglo De Durango August 20, 2012 Durango.- The precipitations registered in the last days in most of the state, allowed optimal moisture conditions to plant, reason why the good crops are expected in October and November. Recovery. Durango s agriculture is recovering after having had big losses for more than 3 thousand million pesos to the severe drought. When announcing this, the Ag and Live Stock Secretary Carlos Matuk, informed that according to preliminary information, there are 180 thousand bean hectares planted and 180 thousand corn and oats hectares planted, this is, 360 thousand hectares in the whole state. These are excellent preliminary figures that give us good crop expectations The authorities hope that precipitations will continue so the moisture continues to be generated for the growing cycle of the plants. LIVE STOCK STILL TO BE ASSESSED In regards with live stock, Matuk commented that this segment requires a longer recovery process and they will make an assessment in the next days. We believe that we lost over 500 thousand heads and we have to plan on the re-population process, he said. THE EXTREME Precipitations have been excessive in some areas reason why in Poanas, because of the water accumulation, bean and corn hectares were lost. The provoked the replanting of these lands with feed oats. The Little Moisture will Reduce Sagarpa s Bean Production Expectations: Producers NTRzacatecas.com August 20, 2012 Zacatecas.- Despite that authorities like Jesus Romo SAGARPA s Delegate in Zacatecas expects a bean crop of around 500 thousand MT, producers in several districts, amongst which are Juan Aldama in the bean zone, assured that they were able to plant with the July precipitations, however, there is a lack of moisture. According to the National Water Commission (CONAGUA) in August there will be 20 percent more precipitations than in other years, but in reality, according to the producers, because of the lack of moisture, the plant will not be able to develop correctly, which will affect the yields. USDBC Mexico August 2012 Report 10

11 Other district s producers like in Canitas de Felipe Pescador, Sombrerete, Fresnillo and Villa de Cos, commented that precipitations in the past days cheered up the farmers to plant. Nevertheless, now we are sad, waiting for some rain and see what we can save., in such way that they estimate that the production will not even reach the 72 thousand MT harvested in 2011, since there are lands that have not received water after these were planted, reason why the affected indicated that even if there were rainfall in the next days, these would not be in favor of the crop anymore in most cases. People dedicated to this activity in Villa de Cos, complained that they were not contemplated in the bean seed support program and that they were not benefited with the cloud bombing, despite they are in an area that produces great amount of beans every year, since there are producers that harves 70 MT. Although a better year was expected, it is resulting the other way around, since as it has happened in the past, the producers made the effort to plant and with hope they got indebted to buy diesel, which is the greater cost, however since a long time ago this activity is no longer profitable. The affected consider that the authorities need to get out of their offices and get closer to the people so they know the problems currently faced. Harvesting 500 thousand MT, not even in dreams, they finalized. 20 Million Pesos to be Invested Supporting Zacatecas Bean Producers Comunicado de Prensa. Gobierno de Zacatecas August 19, 2012 Sombrerete, Zac.- Enrique Flores State Secretary of Ag Development announced the investment of 19.6 million pesos for the acquisition of equipment for the bean producers to be able to harvest in the best conditions. In a reunion with producers from Rio Grande, the Secretary informed that this is the result of the support from the Zacatecas Governor Miguel Alonso to use those resources to buy 45 modules of equipment. The State s SAGARPA Delegate Jesus Ramos said he received orders from the Secretary of Agriculture Francisco Mayorga, to support the Zacatecas producers to deliver on time the payment of the Procampo and Progan support programs that together sum 1.5 biliion pesos of resources Both officials coincided on collaborating to support the producers that were severely affected by last year s drought and that now are expecting to obtain a production of 400 MT of beans from a planted surface of more than 547 thousand hectares that to this date present good growing conditions. Enrique Flores commented that the main purpose of this reunion was to announce the good news of the resources obtained for the equipment since there will be a subsidy of 50% to support the producers interested in acquiring the best equipment this year to harvest in optimal conditions. To this reunion atended the representatives of the producers organizations and groups from Juan Aldama, Miguel Auza, Sombrerete, Sain Alto, Francisco Murguia, Jimenez de Teul and Chalchihuites regions. Quantifying Bean Plants Losses to Grasshopper Plague Akronoticias.com August15, 2012 Casas Grandes, Chihuahua.-Producers are quantifying the bean plants losses to grasshopper plague and are looking for supports to palliate these losses. USDBC Mexico August 2012 Report 11

12 The Major Luis Javier Mendoza mentioned that on July 5th and 6th, they were able to get bean seed at good price to plant, given the good weather conditions and good forecast for beans this year. The seed had a price of 26 pesos per kilo, however through a trader in Namiquipa they purchased at 15 pesos per kilo with the subsidy of 11 pesos from the State government. He commented that the grasshopper plague has finished many of the bean plants and that is why the Rural Development agency is assessing the situation. In the meantime, producers are applying for other supports to be able to plant alfalfa or grass. Water Excess would Damage Beans and Corn (excerpt) Huasteca Hoy August 14, 2012 XILITLA San Luis Potosí.- Growers are afraid that the rains registered in the last few hours will damage the beans and corn, since the rain has been drowning the plants in some areas and it would cause hard losses. Alfonso Soberon Municipal Rural Development Director mentioned that the corn and beans had good expectations mostly because the moisture was within the limits, however, the excess of water some producers that have not harvested would lose their crops. He said that in some communities, they have already harvested however, in other parts, the plants are just blooming and there s where the situation is more difficult. They expect that it will not get worse, so they lose their crops. Plague Puts at Risk 100% of the Crop in Pinos, growers said La Jornada August 13, 2012 Zacatecas.- Precipitations over Zacatecas territory in the last weeks has generated the hope from the government and the producers of recovering from the agricultural production crisis of many years. However, in the municipality of Genaro Godina, a deep plague problem that has not been attended by the authorities is putting at risk 100 percent of the crop according to producers in that region. In the communities of La Purisima, Delgadillo, Tepetate, Enrique Estrada, La Presilla. El Refugio and Los Perales, the grasshopper problem has gotten worse and it can be fought with technology and instruments to which the producers do not have access to. The affected have delivered a petition to the State government asking for help trough the corresponding instances however they have not received an answer. The lands, both arable and feed, have been affected by a grasshopper plague that is immune to certain fertilizers affecting mostly the beans. Although we expressed our concern to the authorities, they only suggested that we should apply the adequate insecticide, leaving the problem at the mercy of our possibilities, and as a result, we were not able to control the plague, therefore our crops have been damaged on top of the drought, the producers expressed in a petition directed to the Governor Miguel Alonso Reyes. According to the producers in the mentioned communities, this agricultural cycle, the plague has been stronger than ever, in such way that the individual and collective efforts have not been sufficient because of the lack of the proper technology. USDBC Mexico August 2012 Report 12

13 If the situation continues like this, the affected assured that in one week the plague could destroy completely their crops this year translating into a total loss in terms if investment and in terms of food production for auto consumption. Therefore, the producers demanded from the Federal Government top ut Genaro Godina and most of the entity in a stage of disaster since that problem cannot be in the hands of us, the small producers, but as a responsibility of the government at all levels. They also explained that the individual sprayers have null results to fight the plague because of the high count of insects, reason why the most efficient option would be the aerial fumigation, however thy have no access to it. Zacatecas Bean Processing Plants Under-used NTR ZACATECAS August 13, 2012 Zacatecas.- Jesus Vallejo, State Undersecretary of Agricultural Development (SEDAGRO) informed that during this year 1,600 of beans have been processed in the Calera plant. The official said that because of the drought, there was only a production of 72 thousand MT whereas in other years the production reached 450 thousand MT. Because of the shortage, the producers did not have time to clean the beans since these were rapidly sold to the intermediaries. Although the two bean plants in Zacatecas are in conditions to be operated, there has not been enough demand although the one in Sombrerete is used once in a while to the request of the producers. He explained that there are some 45 plants in the State, which work with the producers organizations and the little production rescued in December 2011 was from locations like Miguel Auza, Juan Aldama, Sombrerete and Calera; the seed was cleaned, sized and delivered to some 12 thousand producers in the bean areas. This was made knowing that there would not be beans for human consumption, however this year is different, according to INIFAP (Ag and Forestall Research Institute), it will continue raining this month and the next one which will make possible the crops development. This will make possible to recover the bean production leadership since in 2011 the production dropped completely and even with the most modern infrastructure in these two plants, they did not use them because there was nothing to be cleaned. Some producers received 15 and 16 thousand pesos per MT of black beans. This year is more positive, since in 2011 at this date, only 436 thousand hectares had been planted form the 1.72 million programmed. This year 875 thousand hectares have been planted representing 85% of the total, Vallejo said. 65.2% Increase of Bean Production in 2012 SAGARPA August 13, 2012 Includes around 40 thousand hectares of the early planting in February with the first precipitations received in Chihuahua, Durango, Guanajuato and San Luis Potosi SAGARPA estimates this year s bean production with 936 thousand MT Through different strategies such as the early planting of beans in four states, and the better weather conditions, SAGARPA estimates to double the production this year. SAGARPA s estimation considers that 937 thousand MT will be produces, this is 65% more than the obtained last year. USDBC Mexico August 2012 Report 13

14 By 2012 it is expected that they will maintain the average production of 930 thousand MT irrigated and dry land per year The national bean production this year includes around 40 thousand MT coming from an early planting that started in February with the first precipitations received in the states of Chihuahua, Durango, Guanajuato and San Luis Potosi, which allows having more availability before the traditional production season. 570 thousand producers nationwide are dedicated to this activity, from which according to the database, 48 percent are owners of less than 5 hectares. The bean production is divided in four main varieties: 30% black beans, 15% pinto beans, 13% percent Colored beans, 9 percent Azufrados and 33 percent other varieties. In the breakdown by variety, Sinaloa is the state that produces Azufrado, Chihuahua and Durango mainly Pinto; Zacatecas, Oaxaca and Chiapas black beans and San Luis Potosi and Guanajuato plant Flor de Mayo and Flor de Junio. In northeast Mexico they consume mainly Azufrados, in the north Pintos and Flor de Mayo and Flor de Junio, in central Mexico Flor de Mayo/Junio and Black beans and in the southeast they prefer the Black beans. It is important to mention that in 2011 the most important production came from Zacatecas, Nayarit and Chiapas with 45% of the national production with 558 thousand MT. For this year, it is expected to have 1.45 million MT with a human consumption of 933 MT. It is expected that the production this year will surpass the consumer s needs. The per capita consumption in 2012 is estimated at 8.5 kilograms per person, slightly above the average in the last five years. Economic Report President Calderon presented his last State of the Union Address on September 1st. He emphasized the important achievements made in during his administration specially in terms of macro-economic stability, the dissolution of the electricity state company s hard union that nobody in the past would have dared to touch, and last but not least and in the recent weeks, the announcement of one of the most important new oil reserve discoveries in Mexico in many years. President Calderon also highlighted that importance of the record high international reserves that continue to increase, summarizing now US$161.3 billion, enough to cover 2.9 times the amount of bills and coins circulating and 5.1 times the average imports made in the first seven months of this year. He also mentioned the economic growth of 4.3% achieved in the first semester of this year, higher than the growth in the United States and other countries in Latin America, and the exchange rate that has not surpassed the barriers despite of the economic turmoil in the world. Nevertheless, he pointed the importance the pending working and fiscal reforms needed to create more jobs. Nevertheless, President Calderon s term in power also got negative grades from the Private Sector in subjects such as: jobs creation, economic growth, manufacturing and industrial growth, competitiveness and security. The fact is that during his Presidential term, if it s true that the macro economy was maintained, the economic growth at the end of this period will be of only 2 percent average. Another bad grade is that of the jobs creation and the quality of these. USDBC Mexico August 2012 Report 14

15 It will be until after some years, that the people of Mexico will be able to appreciate the good and bad of President Calderon s performance. With the return of the PRI party in power, there are mixed feelings amongst the population and the different sectors. However in general, expectations are more positive as reflected in the positive behavior of the financial markets on the day of the announcement and confirmation on the new President Enrique Pena-Nieto. The National Statistics Institute reported that the Price Consumer Index in August rose to points which translated into the inflation rate represents an annual inflation of 4.57%. Inflation rate is the highest registered in the last 29 months and is 0.57 points higher than the objective rate of 4% set by the Mexican Central Bank. The prices of products and services that caused this high inflation were in first place the fresh eggs, which price doubled- due to the Aviary Influenza occurred in the month of July in one of the most important states that produce eggs (Jalisco), caused the loss of several millions of hens causing a shortage and triggering the price. Despite of the emergency importation of eggs from several countries in the world, -mainly the USA-, the price has not responded to these actions and continue very high, because of the influence of the high prices of grains. Mexico continues to be the number one consumer of fresh eggs in the world and prices are not expected to return to the same levels as couple of months ago. Other prices that contributed to the high inflation rate this month are: gasoline and Universities and High Schools tuitions. Exchange Rate According to specialists the currency markets higher appetite for risk helped to stabilize the Mexican currency lowering the exchange under 13 pesos per U.S. dollar since the first week of September, locating it in its best level since May 2nd. Average exchange rate in August 2012 was pesos per U.S. dollar. Exchange rate in the last working day of August 2012 was pesos per U.S. dollar. Political Environment On the last day of August, the Federal Electoral Tribunal confirmed Enrique Pena-Nieto from the PRI party, as the next President of Mexico for the term After an extensive revision of the claims made by the left wing opposition leaded by Andres-Manuel Lopez-Obrador the Candidate that finished second in the elections, the Tribunal decided in favor of Pena-Nieto. Afterwards, Pena Nieto presented his transition team which will be in charge of receiving the different Secretariats of State from the current administration. The team is formed by politicians from different ideologies and not only by the PRI party as it would have happened in the past, sending a message of change and plurality to the people of Mexico. In the meantime, the deceived Candidate Lopez-Obrador, who lost for the second time in a row the race for the Presidency, confirmed that he does not accept or recognize Pena-Nieto as new President as he did not recognize and accept President Calderon six years ago. Lopez-Obrador announced this week that he is leaving the PRD and PT left parties and will continue working with a different left ideology association he created during the Calderon administration which in time might progress as political party called MORENA. Lopez- USDBC Mexico August 2012 Report 15

16 Obrador has dissolved all of the public demonstrations he had threatened with, leaving the scene in peace at least for the moment. All other political parties from every ideology to this date, have accepted and congratulated the President Elect Enrique Pena-Nieto and he, the new President has started to address to the people sending messages of plurality, democracy and a new era of the PRI party that ruled Mexico not so well for 70 years until year 2000 when they lost the power to the PAN right wing party. President Calderon will deliver the Presidency to him on December 1st, Pena Nieto will govern with a plural congress in which his party does not have the majority. Mexicans in general, those that voted for him and those that didn t are hoping that the change will bring back the peace to this country, one way or another, and also hope that the good macro-economic situation will continue as it has for the last 12 years, having learned the lesson, the people of Mexico with our incipient but stronger than ever democracy and the Opposition shall not permit the PRI to empty our pockets never again. Security The fight against the drug cartels continues and several events have occurred in different parts of the country in the last month as usual since six years ago. Leaders of cartels continue to be arrested every week. However the most remarkable event which is probably not related to the drug cartels but to the current climate of violence in some states is the one occurred on August 24th, when a vehicle from the U.S. Embassy with diplomatic plates, traveling from Mexico City to a Military base located in the state of Morelos, was intercepted and attacked by Federal police in a confusion situation. In this event two Americans from the Embassy and one Mexican Marine resulted wounded. During the attack, the Mexican Marine traveling in the vehicle with the Americans was able to call from his cell phone ask for help to the base. They immediately received help and the attack stopped. It is known now that the Federales were after a similar vehicle suspected of kidnapping and this was an accident. All of the implicated have been detained and Investigations continue. President Calderon has apologized publicly to the U.S. Ambassador in Mexico. New President Pena-Nieto and Security President Pena-Nieto has declared that the fight against the organized crime will continue under his mandate but with a different strategy. Nevertheless, the army and the Marines will continue helping in the streets as it is happening now, until new orders. USDBC Mexico August 2012 Report 16

17 WEATHER REPORT SEE RAINFALL MAPS IN THE FOLLOWING PAGES TEMPERATURE DAY STATE RI STATE RI MAX MIN SOWING CONDITIONS August 1-14 North Baja 0.00 South Baja Weather improved in the region receiving some rain 2012 Sonora 6.04 Sinaloa 4.92 because of different systems in the Pacific. Nayarit 4.33 Nuevo León 4.22 Tamaulipas Weather improving with good rain the region helping S.L.P 9.55 Veracruz crops in the phase of development Chihuahua 4.45 Coahuila Conditions improving in most of the region with more Durango 4.24 Zacatecas 0.68 precipitations. Aguascalientes 1.41 TEMPERATURE DAY STATE RI STATE RI MAX MIN SOWING CONDITIONS August North Baja 0.39 South Baja Good conditions in most of the region because of 2012 Sonora Sinaloa precipitations that will help overcome the severe Nayarit drought Nuevo León Tamaulipas Favorable conditions in this region with good precipitations S.L.P Veracruz for the crops Chihuahua 6.38 Coahuila Conditions improving in this region as rainfall season is Durango Zacatecas generalizing although in some areas rainfall is erratic. Aguascalientes 7.29 PRECIPITATION MAP OF ZACATECAS August 13 th September 12 th, 2012 (rain millimeters), during this period, this state received up to inches of rain: USDBC Mexico August 2012 Report 17

18 PRECIPITATION MAP OF DURANGO: August 13 th September 12 th, 2012, (rain millimeters), during this period they received up to inches of rain in the whole state: USDBC Mexico August 2012 Report 18

19 PRECIPITATION MAP OF MEXICO: August 13-September 12, 2012 (rain millimeters). Since the Chihuahua map is not available, here you can appreciate that during this period Chihuahua (third state from right to left on the US border) they received still very low precipitations this period: USDBC Mexico August 2012 Report 19

20 MONTH: August 2012 MONTHLY CENTRAL MARKET WHOLESALE PRICES REPORT MEXICO CITY MONTERREY GUADALAJARA SINALOA PRODUCT product MARKET VAR MARKET VAR MARKET VAR MARKET VAR VARIETY origin PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % ( state ) current before current before current before current before BEANS Azufrado SIN. Bayo Berrendo JAL % Bayo Berrendo SIN. Bayo Berrando NAY. Garbancillo DGO. Bayo ZAC % Canario SIN. Cacahuate Bola GRO. Canario ZAC. Flor de Junio GTO. Flor de Junio ZAC % % Flor de Mayo SIN. Flor de Mayo GTO. Flor de Mayo ZAC % % Garbancillo ZAC % Garbancillo zarco JAL % Imported Black IMP % % % Nayarit Black NAY. Black S.E. Black SIN. Black QRO. Black bola ZAC % % Veracruz Black VER % Peruano S.E. Peruano SIN % % % % Imported Peruano IMP. Imported Pinto IMP % % Pinto NAY % Pinto ZAC. Pinto JAL. Pinto SIN. Mayacoba SIN % Pinto CHIH % % Pinto DGO. ZACATECAS MERIDA DURANGO NAYARIT PRODUCT product MARKET VAR MARKET VAR MARKET VAR MARKET VAR VARIETY origin PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % ( state ) current before current before current before current before BEANS Bayo DGO % Bayo SIN. Bayo D.F % Azufrado NAY % Canario ZAC. Flor de Junio ZAC % Flor de Mayo DGO % Flor de Mayo D.F. Flor de Mayo ZAC % Ojo de Cabra D.F. Ojo de Cabra DGO. Mayacoba NAY Mayacoba SIN % Garbancillo ZAC. Black NAY % Black DGO % Black S.L.P. Black ZAC % % Peruano IMP. Peruano SIN % #DIV/0! Pinto N.L. Pinto DGO % Imported Pinto IMP. USDBC Mexico August 2012 Report 20 Pinto CHIH. Pinto ZAC %