(Aug. 27, 4:52 p.m.) CHICAGO — Mexico’s consumers will demand ample U.S. apple supplies in the 2008-09 season, but a Mexican apple industry leader said the spread of the light brown apple moth in California and overall tougher scrutiny of U.S. imports could complicate trade in the months ahead.

Kelly Jones, chairman of the board and partner in grower-importer Pico Largo SPR, Chihuahua, Mexico, addressed the U.S. Apple Association’s Outlook and Marketing Conference on Aug. 22. He said Mexico’s apple crop should tally about 19.1 million bushels, down about 4.2% compared with the 19.9 million bushels last year.

“The apple crop will be strong, but not as strong as last year,” he said.

He said most of the crop decrease will come from the state of Chihuahua, where he noted fruit should be larger and more colorful.

In general, Jones said apple acreage is fairly stable in Chihuahua, but growers have been capturing better yields through improved varieties and management techniques in recent years.

Mexican imports of U.S. apples peak in March, April and May, he said, and the combined market for domestic and imported apples is growing about 6% a year.

Imports account for about 30% of all apples consumed in Mexico, down from about 36% in 2000. The U.S. accounted for about 89% of Mexico’s apple imports in 2007-08, followed by Chile with 9% of imports.

U.S. apple exports in 2007 were $170 million, up from $130 million in 2006 and $100 million in 2005, government statistics show. Mexico was the leading destination for 2007 U.S. apple exports, which totaling $639 million.

For the upcoming season, Jones said Mexico’s domestic apple market would be saturated from September to December, because growers in Mexico without storage will be anxious to market their crop.

Buyers in Mexico are paying less money for apples this year than last year, he said.

“Last year was a rough year for those who speculated on apples,” he said.

Prices for field-run Mexican apples this year have been running about 22 cents per pound in recent weeks compared with 26 cents per pound the same time last year.

Still, he said improving technology for storing and packing is pushing more of the Mexican apple crops into the spring and summer months, he said.

Phytosanitary issues

Mexican authorities are closely monitoring the light brown apple moth in California, Jones said.

The pest can attack apples, peaches and other fruit varieties as well as crops like corn and beans — commodities essential to Mexico’s food security.

Beyond the light brown apple moth, Jones said there may be resistance to U.S. imports because of the Food and Drug Administration’s scrutiny of tomatoes and peppers.

Jones said there is increasing talk in Mexico about reciprocity or “mirror policies” with the U.S.

In general, U.S. exporters will face nontariff barriers in the form of limited ports of entry, phytosanitary restrictions, packaging requirements and legal battles related to Mexico’s long-running anti-dumping case.

The Mexican peso was trading at 10.13 to $1 in mid-August, and Jones said the exchange rate should remain favorable for U.S. exports to Mexico during the next six months.

Broader issues in Mexico

Economic priorities in Mexico include facilitating investment in the oil sector and the pursuit of reforms in telecommunications, labor and electricity. Mexico’s economy, aided by the oil sector, is expected to grow by 2.3% this year, he said.

In terms of social issues, Jones said money sent to Mexico from migrant workers in the U.S. dipped 2.2% from January to June this year compared with a year ago because of the slower U.S. economy.

“They have been affected by the loss of jobs up here,” Jones said. “I’m starting to see employees that used to work for me coming back home again, saying they can’t find a job (in the U.S.),” he said.

Meanwhile, he said drug-related crime in Mexico is continuing to be disruptive to foreign investment and public safety.