Milk Imports From the US Put Small Producers in Mexico at Risk

The US Department of Agriculture (USDA) reported that by the end of 3Q22, dairy exports from the US to Mexico showed 33.2% growth against 2021. Mexican authorities warned that the increase in milk powder imports risks the livelihood of small dairy producers.

The USDA pointed out that dairy exports to Mexico reached US$2.054 billion, during 2022. Cream and milk powder were the products with the highest trade index, with sales representing US$1.269 billion. Daniel Ruiz, Dairy Livestock Production Manager, PROAN (Animal Protein) warned that under the current conditions of inflation, the continuous imports of milk powder will risk the disappearance of many small and medium producers in Los Altos de Jalisco, one of the main dairy productive areas of the country. 

During an interview with El Economista, Ruiz stressed that large producers have a greater capacity to deal with situations such as the rise in inputs and the competition in powdered milk imports. However, small farmers cannot do the same. “At PROAN, we have not resented the situation. However, small-scale producers are at risk of losing their cattle,” he said. PROAN owns 12,000 cows and provides milk to companies such as Alpura, Santa Clara and Danone. 

Ruiz stated that even though inputs like livestock feed have gradually lowered their costs, prices for the final customer have remained high, while payments to producers are still being punished. “Shops and supermarkets have not lowered the price of milk, being the only ones benefiting from this situation,” he said.

Mexico's average annual milk production accounts for 12,852 million L. In the country, there are 257,000 small and medium-scale dairy farmers. Overall, 121,538 have 30 cows or less, 28,127 possess between 31 and 100, 1,022 own 101 to 600 and 421 producers have more than 600 heads. The remaining 105,541, have dual purpose cows (cattle and milk).

USDA forecasts indicate that during 2023, Mexican liquid milk production will increase 2% over the previous year. At the same time, consumption will continue to grow, which means that imports will follow this trend, with the aim of meeting demand.