THE MEXICAN HOG INDUSTRY: MOVING BEYOND 2003

(4) Labor costs. The cost of labor is probably the only competitive
advantage that Mexican hog producers have. Although the minimum wage
in Mexico is $0.43 per hour, the farm wage rate is normally in the range of
$0.70 to $1.20 per hour. When compared with U.S. wage rates ranging from
$5.50 to $7.50 per hour, this is a tremendous competitive advantage for
Mexican hog producers, even though it has enormous social and economic
implications for the country.

(5) Cost comparison. Table 4 compares the production cost of two good
hog-farrowing units in the United States and Mexico. The Mexican hog
operation in the table produces a 5.6-kilogram weaned pig at $22.29,
compared with $20.10 in the United States. Feed accounts for 44 percent of
the Mexican producer’s total costs, compared with 29 percent in the United
States. The difference in feed costs ($4.01) is partially offset by the savings
that the Mexican farmer has for labor and management costs ($4.25). When
catching and hauling costs are compared, Mexican expenses are about $0.86
higher per animal than in the United States.

Table 4--Comparison of Production Costs in United States and Mexico

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