August 17, 2017

Dairy Exports to Mexico Create Nearly 25,000 Jobs and Countless Friendships

 |  By: Tom Vilsack

It might surprise many Americans that U.S. dairy exports to Mexico have created nearly 25,000 jobs in the United States.

Even more overlooked and underappreciated is the fact that across-the-border dairy relationships are building trust and loyalty that reap rewards for years to come. 

It's something to think about this week as the United States, Mexico and Canada begin round one of talks to modernize the North American Free Trade Agreement (NAFTA). Because Mexico and Canada are our top two markets, these talks are vitally important to our industry. 

Last year, we exported $1.2 billion to Mexico alone. At the halfway point of this year, dairy exports to Mexico are up 32% compared to last year. Plenty of upside remains. 

USDEC has identified key areas for improvement of NAFTA, such as Canada’s approach to distorting dairy trade through exorbitant tariffs and nontariff policies. But our No. 1 message about NAFTA and Mexico is "do no harm" to this win-win relationship.

It's a relationship with many layers: country-to-country, industry-to-industry, business-to-business and person-to-person.

Building trust takes time

You can measure the balance of trade, the ups and downs of exports and the rippling economic impact of exports. But how do you measure the benefit of a partnership between hard-working Midwesterners in Davenport, Iowa, and grateful employees at a family-owned company in Mexico City?

It's a relationship so close they refer to each other as "family."

That took time. In 2008, Chris Hoeger of Davenport-based Swiss Valley Farms took cheese samples on an exploratory trip to Mexico to test the potential for exports there. It did not go well.

Undaunted, Hoeger and Swiss Valley Farms pressed on. With help from USDEC, Hoeger made more connections, and more trips. The company eventually picked up customers, including Cremeria San Jose. 

“For us, Swiss Valley isn’t just a supplier. They are family," said Miguel Castillo Gonzalez, director of operations at Cremeria San Jose, a company begun by Gonzalez’ grandfather in 1945. 

"When we started with Swiss Valley years ago, they weren’t exporting a lot," explained Castillo in a recent interview in Mexico City. "It took almost a year to set things up. There were a lot of steps, a lot of back and forth. We worked together and we sweat together.”

Consequently, high-quality cheese from Iowa is enjoyed throughout Mexico City. This includes gorgonzola favored by specialty pizzerias, blue cheese used in dips for chicken wings and cream cheese topping flaky tarts displayed in Mexico City's bakeries.

Today, Swiss Valley Farms is part of Prairie Farms Dairy. Hoeger serves as president of the cheese division. The farmer-owned business has manufacturing plants in Iowa, Wisconsin and Minnesota. The milk from cows in these three states is turned into dairy products and ingredients exported to Mexico and dozens of other countries. That adds economic fuel to state and local economies. 

For example, last year's dairy exports from Iowa to all countries (not just Mexico), supported nearly 1,393 jobs and $258 million in economic impact.

How do you measure goodwill?

When I served as U.S. Agriculture Secretary, and before that, governor of Iowa, I saw first-hand how a wide variety of agriculture exports created jobs and built cross-cultural relationships. It's a positive but often overlooked story.

U.S. agriculture is one of the few aspects of our economy that has showed a trade surplus over the last 50 years. All told, nearly a million people are employed as a result of agricultural exports. 

Those are facts. But how many business partnerships and authentic friendships have been created by dairy and other agricultural exports?

Those are intangibles. No one knows for sure. Nonetheless, the benefits of business-to-business and person-to-person goodwill are well worth considering as NAFTA negotiations begin.