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June 1, 2017

Exports to Mexico Will Remain Strong

 |  By: Mike Opperman

Expansion in the Mexican dairy industry has been fueled by ongoing commitments by the Government of Mexico as well as infrastructure support by industry stakeholders. While production grows, it’s still not enough to support domestic demand, leaving opportunity for imports of dairy products.

For many years Mexico has looked to the United States as a primary supplier of milk powder, cheese and other products. As policies change, especially with regard to NAFTA, Mexico continues to explore opportunities to diversify its supply base. While the U.S. will certainly remain as a primary supplier, Mexico looks to establish bilateral agreements with at least five of the 10 member countries in the Trans Pacific Partnership. This includes Japan, New Zealand and China—in addition to the European Union—all of which are in line to capture market share. This is of concern to U.S. dairy producers, as increasing production seeks export markets to alleviate supply constraints.

A report by the USDA Foreign Agricultural Service Global Agricultural Information Network shows how the dairy industry in Mexico has continued to expand:

  • Milk production: Fluid milk production hit 12.3 million metric tons, and consumer fluid milk consumption is at 4.2 million metric tons. Production is still not sufficient to meet the demand of the processing sector. Increased production is due to better genetics, reproductive successes and enhanced milking practices.
  • Cheese: Around 60 varieties of cheese are produced. However, cheese production relies on high quality milk, and cheese processors struggle to find domestic inputs. Because of this, imports of fluid milk fill the supply gap.
  • Butter: Mexico is in the top 10 for butter imports, importing as much as 25 percent of the butter it consumes. Most of the butter is imported from New Zealand, with the U.S. a distant second.
  • Nonfat dry milk: With the competition for the domestic milk supply by processors, NFDM demand is closely tied to fluid milk availability.  Because of the market opportunity, there is significant competition from the EU, New Zealand and the U.S. to fill that market. While the U.S. will remain the primary supplier, Mexico is looking for other suppliers to guarantee supply.

The full report can be found here