The Secretariat of the Public Service published on July 23, 2012 an agreement to release nine sugar mills from Federal control in order to sell them by public tender.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number: MX 2057
Mexico Takes Steps to Privatize State-Owned Sugar Mills
Agriculture in the News
Policy and Program Announcements
The Secretariat of the Public Service published in the Diario Oficial (Federal Register), on July 23,
2012 an agreement to release nine sugar mills from Federal control in order to sell them by public
tender. The Secretariat of Agriculture (SAGARPA) will have to determine the strategies that the
government will follow in order to proceed with the public tenders.
Disclaimer: This summary is based on a cursory review of the subject announcement and therefore
should not, under any circumstances, be viewed as a definitive reading of the regulation in question, or
of its implications for U.S. agricultural export trade interests. In the event of a discrepancy or
discrepancies between this summary and the complete regulation or announcement as published in
Spanish, the latter shall prevail.
Title: Agreement by which various properties that are part of nine industrial units known as sugar
mills, are disincorporated from the regime of public domain of the Federation, located in the states of
Morelos, Puebla, San Luis Potosi and Veracruz, and authorizing its sale through the Management
Service and Property Disposal (SAE).
Executive Summary: This report summarizes an announcement by the Secretariat of the Public
Service published in Mexico’s Diario Oficial on July 23, 2012 to release nine sugar mills from Federal
property and sell them by public tender. The Secretariat of Public Service is an agency of the Federal
Executive that promotes compliance with the monitoring and control processes of the federal
government, directs and determines the procurement policy of the Federation, and coordinates and
conducts audits on the expenditure of federal funds, among other functions.
In September 2001, the Government of Mexico (GOM) expropriated 27 sugar mills from several sugar
industry groups based on charges that national sugar supply was in danger, that they were highly
indebted, and that the mills actions endangered the jobs of thousands of employees. The nine mills
announced in this publication are the last to be divested by the government. Since expropriation, these
mills have been owned and administered by FEESA (Fund of Expropriated Companies from the Sugar
Sector) and have generally been responsible for 20-30 percent of Mexico’s annual sugar production.
The current administration is interested in finding a solution that results in a re-privatization of the mills,
a process that began in 2006. The nine mills belonged to Grupo CAZE and could not be returned to it
due to pending litigation issues.
SUGAR MILLS STATE
El Modelo Veracruz
El Potrero Veracruz
Emiliano Zapata Morelos
La Providencia Veracruz
Plan de San Luis San Luis Potosi
San Cristobal Veracruz
San Miguelito Veracruz
For purposes of the sale, SAGARPA has decided to offer the nine mills as ongoing businesses. The
sales process will be conducted through SAE -Management Service and Property Disposal
MX2057 Mexico takes steps to privatize state-owned sugar mills Page 2
(decentralized entity of the Federal Public Administration from the Secretariat of Treasury).
SAGARPA will determine the strategies that SAE will follow in order to be able to proceed with the
public tenders. Although its intentions are unclear at this time, SAGARPA may choose to offer all nine
mills as a block, single mills, small groups of mills, or a combination of the above.
The first step in the sales process for the GOM will be to go through the legal proceedings to
disincorporate the mills from the public domain of the Federation and authorize the selling of the mills
by public tender through SAE. However, this step cannot be completed until a resolution is reached in
the litigation process that was brought to the courts by Grupo CAZE to have the nine mills returned to
SAGARPA’s Secretary of Agriculture publicly commented that the privatization of the mills will allow
the industry to invest in infrastructure that the government had not been able to do because of budget
reasons. The Mexican sugar industry also prefers that the remaining mills be privatized so that all mills
are operating based on private commercial decisions.
This is not the first time that the GOM has talked about reprivatizing these mills. Significant legal and
political challenges will have to be overcome if these mills are to be purchased by private interests.
1. Publication Date: February 7, 2012.
2. Effective Date: April 7, 2012 (sixty calendar days after publication)
For More Information
FAS/Mexico Web Site: We are available at www.mexico-usda.com or visit the FAS headquarters'
home page at www.fas.usda.gov for a complete selection of FAS worldwide agricultural reporting.
FAS/Mexico YouTube Channel: Catch the latest videos of FAS Mexico at work
Useful Mexican Web Sites: Mexico's equivalent of the U.S. Department of Agriculture (SAGARPA)
can be found at www.sagarpa.gob.mx, the equivalent of the U.S. Department of Commerce (SE) can be
found at www.economia.gob.mx, and the equivalent of the U.S. Food and Drug Administration
(SALUD) can be found at www.salud.gob.mx. These web sites are mentioned for the reader's
convenience but USDA does NOT in any way endorse, guarantee the accuracy of, or necessarily concur
with, the information contained on the mentioned sites.
Report Number Title of Report Date Submitted
MX2019 Sugar Annual 04/10/2012
MX2057 Mexico takes steps to privatize state-owned sugar mills Page 3