Industrias Bachoco: main raw materials

One of the largest poultry producers in Mexico, Industrias Bachoco is an integrated company with an outstanding consumption of raw materials.

Its process begins with the production of balanced feed, as well as the purchase of hatching eggs or day-old birds. 

The chicken production process begins with the purchase of day-old birds, called «parent birds», which are acquired from genetics companies in the United States and other countries. 

These parent birds then reach maturity at Bachoco’s farms, where they produce hatching eggs to continue the production process. 

The main component of the cost of sales is the cost of grains, mainly corn, sorghum and soybean meal, used in the production of animal feed at the company’s plants. 

Grain prices are subject to high volatility as a result of various factors, such as weather conditions, crop supply, storage, government policies and the exchange rate, among others. 

Industrias Bachoco hedges to ensure a more stable grain cost. 

In Mexico, grain harvests are limited, so a significant percentage of the needs for these inputs are imported from the United States. 

In 2022, in terms of volume, the company purchased approximately 16.9% of its grain consumption in the domestic market and 83.1% from the United States.

Industrias Bachoco

According to estimates from Mexico’s National Union of Poultry Farmers (UNA), chicken production in Mexico grew at an estimated 2.7% in 2022, while egg production showed a decline of about 1.5 percent. 

As for the U.S. poultry industry, according to the U.S. Department of Agriculture (USDA), the volume of chicken produced grew 2.9% in 2022, which is above its normalized growth rate. 

Per capita consumption of chicken in Mexico increased in both markets. 

On the other hand, during most of 2022, high prices were observed for corn and soybean paste, both in dollar terms and in Mexican pesos, compared to 2021 values. 

Chicken production

In this regard, Industrias Bachoco made efforts to try to offset this negative impact through operating efficiencies and our sales mix.

The company operates mainly in Mexico and the United States.

According to our internal estimates, Industrias Bachoco represents approximately 34.0 percent of the Mexican chicken production market and is the second largest egg producer, with an estimated market share of approximately 5.0 percent.