Mexican Pork Industry at a Crossroads: Additional Investment Needed to Limit Risk and Satisfy Growing Demand

The industry has two main options as it looks to the future. Through additional investment, it has an opportunity to stabilize production and – in our view – to generate more predictable financial returns if it proceeds to: (1) accelerate investments in biosecurity and worker skills and capabilities, (2) consolidate weaker players and move toward further vertical integration, and (3) raise carcass values through sales of higher value, convenience products and growth in exports. Alternatively, if the appetite for further investment has been exhausted, the industry can pause on its modernization pathway, leaving itself exposed to the volatility that has been associated with herd health challenges and the tighter margins associated with inconsistent pork quality.