Image credits: Mike Mozart
News Article

Dairy Industry Going Strong Despite Hiccups

By Jan Hogewoning | Fri, 01/08/2021 - 16:55

The dairy industry has managed fairly well through the pandemic, despite facing a few hiccups lately. On the whole, performance figures have been cause for optimism. The treasurer of the National Confederation of Livestock Organizations (CNOG), Salvador Álvarez Morán, told El Universal that due to the closure of restaurants and hotels, consumption of cheeses and cream went down. On the other hand, sales of pasteurized and ultra-pasteurized milk rose as home-confined consumers purchased more milk than usual. Longer-lasting milk, in particular, was a popular product during panic-buying sprees. This, Moran says, managed to balance out the loss in sales of cheeses and creams overall. Another favorable effect of the pandemic is that producers have not had to deal with surplus production during the holiday periods, as consumers did not go on vacation and continued to purchase milk.

According to statistics from INEGI, between January and November 2020, processed milk saw the highest price inflation at 8.5 percent. Products derived from milk increased by 7.1 percent and pasteurized milk saw a rise of 6.2 percent. In late December, Moran stated that he expected national production of milk for 2020 to increase by 2 percent against 2019. This would amount to 12.4 billion L of milk for 2020. Consumption, he expected, would remain steady at 15 billion L. While the country exports about 1 billion L, Mexico was expected to maintain a trade deficit between 27 percent and 30 percent due to its dependency on imports to satisfy domestic demand.

Moran also pointed out that Mexico imports 170,000 tons of American cheeses per year. These, he said, are of the ‘lowest quality’ and primarily destined to be a topping for fast foods and street foods. European cheeses, amounting to 22,000 tons of imported product, are more high-end and consumed by a less price-sensitive clientele, he said.


LICONSA and Angry Dairy Farmers

In the past weeks, LICONSA has been a source of anger for many dairy farmers. The parastatal company, which distributes and sells subsidized dairy products, has been accused of late payment to its dairy suppliers. Yesterday, MBN wrote that farmers in Jalisco state have been awaiting payment for several months. According to Ganadería, the farmers most affected are smaller scale producers. A group of dairy farmers from the state have now called upon the president to launch an audit investigation against LICONSA, accusing it of corrupt activity.

In other news, several communities in the State of Mexico faced a shortage of dairy supply in past weeks as LICONSA stores in the area were closed. Jornada de Estado de México reported on Thursday, Jan. 7, that stores are now open.


Danone Learns New Lessons Amid the Pandemic

Read our interview with Silvia Davila, Regional President Latin America of Danone Dairy, where she explains how the company managed to adapt its product portfolio to meet rapidly changing consumer behavior during the pandemic. She also mentions Proyecto Margarita, an initiative that ensures Danone Dairy sources milk from close to 500 small scale dairy farmers around the country.

Photo by:   Mike Mozart
Jan Hogewoning Jan Hogewoning Journalist and Industry Analyst