DAIRY MARKETS M-14 And POLICY ISSUES O
DAIRY MARKETSM-1M14POLICYAndI SSUESANDO PTIONSApril 1994AN OVERVIEW OF THEMEXICAN DAIRY SECTORJoe Outlaw and Charles Nicholson*Milk Production and Processing in MexicoGrowth of milk production in Mexico over thepast two decades has been uneven. According toUSDA, total milk production in Mexico more thandoubled from 1970 to 1980, declined to 15.3 billion in1985, and rebounded to the 1980 production level of23.6 billion pounds in 1992 (an amount comparable toproduction in California or Wisconsin, Figure 1). Theproduction decline in the mid-1980s was largely attributable to government price controls and related policies. Although a number of milk production estimatesare available for Mexico from different governmentaland producer association sources, production levels aregenerally the same regardless of the source.Estimates of the number of cows in Mexico varymuch more than production and are felt to be lessreliable. The large number of dual-purpose (milk-beef)herds in Mexico’s tropics makes definition and estimation of the country’s total dairy herd difficult. USDAestimates are considerably higher than those of Mexican governmental agencies. However, officials inMexico appear to be less concerned with estimating thenumber of cows than with total milk production. USDAestimates of Mexican and U.S. dairy cattle inventoriesare shown in Figure 2.Figure 1. Total Milk Production in Mexicoand the United States, 1970-1992(billion pounds)Mexico and the United States agreed to negotiatea trade agreement in June 1990. Canada subsequentlyjoined the negotiations, and a provisional North American Free Trade Agreement (NAFTA) was signed inSeptember 1992. The U.S. Congress approved a slightlymodified agreement in November 1993 and the NAFTAbecame effective as of January 1, 1994. The NAFTAwill substantially reduce trade barriers between theUnited States and Mexico, yet it permits each country tomaintain current domestic programs, policies and product standards. This is the first of two leaflets examiningthe short- and intermediate-term potential of expandeddairy trade with Mexico.Benefits of greater trade between the U.S. andMexico are already being realized by the U.S. dairyindustry, as evidenced by expanded exports of fluidmilk and frozen dairy products. Prospects for furtherincreases in U.S. exports of dairy products will dependcrucially on future developments in Mexican production, consumption, and trade with other partners. Thisleaflet emphasizes recent trends in production and consumption in Mexico and examines historical dairy tradepatterns. Leaflet P-14 explores the possible consequences of increased dairy trade under the NAFTA forthe U.S. dairy industry and discusses issues of 98819901992US*The authors are, respectively, Assistant Research Scientist, Department of Agricultural Economics, Texas A&M University, and Ph.D.candidate, Department of Agricultural, Resource, and Managerial Economics at Cornell University.This paper is part of a series entitled "Dairy Markets and Policy—Issues and Options,"projectof Cornell University's Programon Dairy Markets and Policy.DAIRY MARKETS AND P OLICY—IaSSUESAND O PTIONS1No. M-14
weaning (and sometimes market weights) on-farm,deriving additional income from sale of milk not allocated to growing calves. This production system provides about 30 percent of the domestic milk supply andaccounts for about 45 percent of all dairy cows inMexico. The cows, typically Zebu and some Zebucrosses, yield only 1,200 to 1,700 lbs. (540 to 750 liters)per year. Grazed forage is the principal feed; supplementation is minimal. Herd sizes average 25 to 30cows. Dual-purpose operations often are fairly isolated,lack access to good roads or marketing systems, andtend to be located in the tropics along the Gulf of Mexicoand along the border with Guatemala. Because pastureis more abundant during the rainy season (Septemberthrough December), dual-purpose milk production ishighly seasonal.Figure 2. Total Milk Cows in Mexico andthe United States, 1970-199213000120001100010000(000 oduction SystemsMexico’s dairy producers employ more diverseproduction technologies than the U.S., ranging fromconfined operations similar to those in the U.S. to dualpurpose dairies similar to those seen in many developing countries. Milk is produced under at least threedistinct systems. The confined system accounts forapproximately 55 percent of the domestically producedmilk and about 18 percent of the national dairy herd.Cows in these herds, typically Holsteins, are fed alfalfa,other forages, and concentrates. They produce 9,100 to13,600 lbs. (4,000 to 6,000 liters) of milk per year. Herdsizes average over 500 cows. Artificial inseminationand careful genetic management are typical in theseoperations. About 40 percent of confined dairies innorthern Mexico have milking machines and coolingtanks.1 These operations are located primarily along theborders of California, New Mexico, and Texas and innorth-central Mexico.The semi-confined or pastoral system representsapproximately 15 percent of Mexico’s milk productionand approximately 37 percent of the national dairy herd.Cows in these herds are usually Holstein-Zebu or BrownSwiss-Zebu crossbreeds producing 5,400 to 9,100 lbs.(2,400 to 4,000 liters) annually. They are maintained onnative or improved pasture, supplemented by corn stalksand sometimes grains fortified with oilseed meals.Herd sizes are small, usually 10 to 15 cows. Theseoperations are primarily located in Mexico’s central andnorthern regions.Dual-purpose operations in Mexico raise calves toDairy Processing and Distribution in MexicoA relatively small number of companies processdairy products in Mexico, and a few large companiesdominate the markets for many products. Currently, themajor fluid milk processors are Grupo Alpura, GrupoLALA, Guilsa, Nestlé, and Boreal. A large share of theraw milk produced in Mexico is not chilled on-farmprior to delivery to processors. In addition, 30 to 50percent of all raw milk is marketed directly by producers or small-scale marketers, reflecting incentives toavoid the price controls formerly imposed on formalmarketing channels.Water is frequently added to fluid milk by bothproducers and transporters to extend volume, a practicethat is illegal in the U.S. Processors also commonlysubstitute vegetable fats for butterfat (referred to as“filling”) in manufactured dairy products and in fluidmilk. Filled milk is permitted in Mexico; up to 80percent of the milkfat can be replaced with cheapervegetable fat in some products as long as they arelabeled accordingly. Filled milk is legal in the U.S., butany such product must be clearly labeled as such. Milksafety regulations in Mexico are as stringent as (sometimes more so than) comparable U.S. codes. However,U.S. regulations are enforced while those in Mexicooften are not.Factors Influencing Future Production and ProcessingSeveral factors will have a substantial effect onfuture milk production and processing in Mexico.1Source: USDA Agricultural Attaché Report, December 15, 1992.DAIRY MARKETS AND POLICY—ISSUES AND OPTIONS2No. M-14
important. Recently adopted changes in land-use policies will significantly affect the future structure ofMexican agriculture. The new policies will allow largeland areas, once owned by the government but farmedcommunally, to be owned outright by members of thecommunity. As a result, the agricultural sector willlikely move away from traditional, subsistence farmingtowards larger-scale, commercial farming.The low cost and availability of labor in Mexico isoften cited as a factor that could help support growth inlabor-intensive industries like agriculture. Althoughthe labor cost per hour is low and labor is plentiful, theunit labor cost of producing milk in Mexico may behigher because of the lower output per cow and the lackof mechanization. With increased productivity andmechanization, however, the potential exists for higherlabor productivity and lower labor costs per unit of milkproduced.NAFTA would improve the access of Mexicanfarmers to agricultural inputs such as new and used farmequipment, spare parts, improved seeds and breedingstock, feeds and additives for animal nutrition, andtechnical consulting. Many confined system producersare improving breeding stock, in part by imports ofbulls, semen, and heifers from the United States. Table 1documents U.S. exports of dairy breeding cattle toMexico as well as the value of all breeding semen. Noimport permits are required and there are no ad valoremtariffs on bull semen or purebred breeding dairy cattle.A proportion of current growth in milk production canbe attributed to the movement away from traditional,land-extensive types of dairy production systems tohigher yielding, confined feeding systems. GivenAmong these factors are producer milk prices, cost andaccessibility of production inputs, and improvements inthe distribution and processing infrastructure.Milk prices. During the 1980s, milk production inMexico failed to keep pace with population growth, duein part to government policies. Before 1988, producer,processor and retail milk prices were controlled by thecentral government. Producers often found themselvesin a cost-price squeeze with milk prices fixed and inputcosts rising. The resulting economic disincentives ledto liquidation of the dairy herd and sharply reduced milkproduction. Milk production began to rebound in 1986,in part due to increased imports of high-producing cowsas the U.S. implemented the Dairy Termination Program. Over 25,000 cows were exported to Mexico in1986, up dramatically from only 1,400 in 1984.Incentives to expand milk production resultedfrom a dramatic 1988 change in dairy price policy. Incontrast to previous central government control, milkprices now are determined on a state or regional basis.Producer prices are negotiated among producer organizations, governmental agencies, and raw milk purchasers, with consideration given to costs of production.According to the U.S. Agricultural Counselor in MexicoCity, October 1992 producer prices ranged from 9.73to 14.18 per cwt (compared with a range in U.S. stateaverage all-milk producer prices of 11.49 per cwt inCalifornia to 16.40 per cwt in Florida). As in the U.S.,Mexican producers complain that prices are too low.Because milk is the only beverage included in calculations of inflation, Mexican governmental agencies havefew incentives to raise milk prices.Cost and accessibility of production inputs. Costsof production relative to producer milk prices willcontinue to have a significant effect on Mexico’s milkproduction. Based on a limited number of estimates forconfined operations in northern Mexico, average U.S.and Mexican production costs per hundredweight arenot substantially different. Production costs for semiconfined and dual-purpose systems may be lower thanaverage U.S. costs, but assembly and marketing costsare higher. Little information is available on the profitability of Mexican dairy operations, but the increase inmilk production in the late 1980s is due in part toimproved producer incentives.Cost and accessibility of production inputs willobviously influence future production patterns. Restrictions on land use, labor costs, and NAFTA’s effectson availability of new production inputs are cruciallyDAIRY MARKETS AND P OLICY—ISSUES AND OPTIONSTable 1.U.S. Exports to Mexico of Dairy Breeding Animalsand Breeding Semen, 1980 to 2814,98723,15427,31722,52423,898Breeding semenvalue(mil )0.81.41.20.81.31.91.61.52.02.63.43.74.2No. M-14
U.S. level, lower than consumption in the early 1980s(Figure 3).This difference in fluid milk consumption is offsetsomewhat by Mexican per capita consumption of NDMalmost three times the U.S. level. Often this nonfat drymilk is reconstituted with vegetable fat for low-incomesocial programs. Mexico’s per capita NDM fluid equivalent consumption was 6.87 gallons in 1991. If the twofigures are combined, Mexico’s fluid milk and fluidequivalent consumption was 19.34 gallons, or 73 percent of U.S. fluid milk consumption. This represents ahigh-end estimate of beverage consumption becausesome of the NDM is used to make other products. Retailmilk prices in Mexico appear to be somewhat lowerthan U.S. prices. During October 1992, Mexican consumers paid from 1.50 to 2.10 per gallon of pasteurized milk, whereas U.S. retail prices in October 1992averaged 2.82 per gallon.Cheese and butter consumption in Mexico havebeen lower than U.S. levels for many years (Figure 3).changes in input costs, this trend toward confined feeding systems appears likely to continue.Improvements in distribution and processing infrastructure. Improvements in the transportation system to allow more efficient processing and distributioncould alter producer milk prices and the location of milkproduction in Mexico. Because improvements in infrastructure would require substantial investments, suchchanges will likely take place slowly for Mexico as awhole. However, NAFTA may create promising investment opportunities upon its implementation.Current Mexican Dairy Consumption PatternsAggregate per capita dairy product consumptionin Mexico was about 46 percent of the U.S. level in1991, according to USDA estimates. Mexico’s percapita consumption, however, has been growing at justover 2 percent annually since 1988, compared with a 0.2percent decline in the United States. In 1991, per capitafluid milk consumption in Mexico was 47 percent of theFigure 3. Per Capita Dairy Consumption, Mexico and U.S., 1980-91.b. Nonfat dry milka. Fluid 19821983198419851986Mexicoc. Butter198819891990199119901991d. 9841985Mexico1986198719881989199019911980U.S.DAIRY MARKETS AND POLICY—ISSUES AND U.S.No. M-14
largely responsible. U.S. exports of dairy products toMexico have, to varying degrees, kept pace with changesin total Mexican imports (Figure 4). In 1991 and 1992,for example, Mexico was the single largest importer ofdairy products from the U.S. (Figure 5). Data concerning U.S. exports of dairy products to Mexico differdepending on the source, and total dairy product imports reported by Mexican agencies are sometimes lessthan USDA’s reported exports to Mexico alone. Thus,the data in this leaflet should be treated as representativeof general trends in dairy product trade between the U.S.and Mexico, but the absolute levels of products tradedare less certain.U.S. fluid milk exports to Mexico rose from 14.7million pounds in 1984 to 104.8 million pounds in 1992.Because of its proximity to the United States andrelative ease of shipping, most Mexican fluid milkimports are from the United States. Nonfat dry milk(NDM) exports to Mexico fluctuated widely during thelast decade but remain near levels in the early 1980s.The U.S. share of Mexican NDM imports is affected byprice competitiveness, the general availability of NDM,and the level of assistance from export subsidy programs. The share has ranged from practically zero in1981 to almost 60 percent in 1983, but typically U.S.exports accounted for 30 to 50 percent of Mexicannonfat dry milk imports. This nonfat dry milk is usedmainly in reconstituting milk as a fluid milk substituteand in cheese production.Mexican butter imports fluctuated during the1980s, but have increased in the early 1990s. TheUnited States currently is the principal shipper of butterto Mexico. Anhydrous milkfat, a more concentratedform than butter, is an important form of U.S. butterexports to Mexico. Butterfat is used mainly as an inputin cheese production, along with nonfat dry milk. Mexican cheese imports showed strong growth during thelast decade, increasing from 2,000 metric tons in 1980to 20,000 metric tons in 1992. The United Statesprovided 20 to 40 percent of Mexican cheese imports.Most of the imported cheese is hard cheese from European countries, which is preferred by upper incomeconsumers due to its presumed higher quality.Although the United States has a locational advantage in exporting dairy products to Mexico, stiff competition from several other countries, mostly European,exists in the Mexican market for some dairy products.Mexican dairy import shares by source country for 1991In 1991, Mexico’s per capita cheese consumption was40 percent of the U.S. level, while butter was at 20percent of U.S. levels. Traditionally, butter has not beenan integral part of the Mexican diet. Beans have beenpreferred to cheese in supplying protein needs, althoughfarm-processed cheese is consumed in tropical regions.With higher incomes, cheese consumption could beexpected to increase.Although Mexican cheese and butter consumption were well below U.S. levels from the 1980 to 1991,fluid milk consumption was much closer to U.S. levelsin the early 1980s (Figure 3). The decline in per capitafluid milk consumption from 1980 to 1991 coincideswith a period of economic difficulty in Mexico. Thedecline in per capita incomes during the 1980s had aprofound effect upon the consumption of dairy productsin Mexico. Between 1981 and 1988, nominal per capitaincomes in Mexico fell 35 percent from 2,880 to 1,760 before recovering to 2,490 in 1990. During thatperiod, aggregate consumption of dairy products fell bynearly one-half. Recovery occurred during the early1990s and clearly the potential exists for increasedconsumption of dairy products primarily due to population growth and recovery of per capita incomes.Future Mexican ConsumptionThe demand for dairy products in Mexico couldexceed domestic supplies due to population growth,whether or not per capita consumption increases.Mexico’s population of 90 million is almost one-thirdthe size of the U.S. market, and is projected to increaseby over 40 percent to 129 million by the year 2010. Themajority of the population is below 20 years of age andlives in an urban area. Significant growth in dairyproduct consumption is possible due to the dietaryneeds of the young and market concentration in thecities. The increases in per capita income in 1989 and1990 are expected to continue into the 1990s, improvingthe prospects for an increase in demand for dairy products, especially for specialty products such as ice creamand yogurt. NAFTA could have significant impact onthe availability of milk in Mexico and, therefore, uponthe price of dairy products.Mexican Dairy Trade PatternsDuring the 1980s, Mexico emerged as a majorimporter of dairy products; in fact, Mexico became theworld’s largest market for milk powder. Productionshortfalls coupled with consumption increases wereDAIRY MARKETS AND P OLICY—ISSUES AND OPTIONS5No. M-14
Figure 4. Total Mexican Imports and U.S. Exports to Mexico of Selected Dairy Products, 1980-1993.a. Fluid Milkb. Nonfat dry milk503004527540250225(000 metric tons)(000 metric tons)35302520152001751501251007510505250019801980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993Mexican imports198219841986Mexican importsU.S. exports to Mexicoc. Butter1988199019921994U.S. exports to Mexicod. Cheese142522.5122017.5(000 metric tons)(000 metric tons)10861512.5107.54522.5001980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993Mexican imports1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993U.S. exports to MexicoMexican importsU.S. exports to MexicoButter
*The authors are, respectively, Assistant Research Scientist, Department of Agricultural Economics, Texas A&M University, and Ph.D. candidate, Department of Agricultural, Resource, and Managerial Economics at Cornell University. M-14 ISSUES AND OPTIONS And POLICY DAIRY MARKETS.
DAIRY MARKET NEWS WEEK OF FEBRUARY 15 - 19, 2021 VOLUME 88, REPORT 7 DAIRY MARKET NEWS AT A GLANCE TABLE OF CONTENTS Product Highlights/CME/DMN at a Glance 1 Weekly CME Cash Trading/Butter Markets 2 Cheese Markets 3 Fluid Milk and Cream 4 Nonfat Dry Milk/Dry Buttermilk/Dry Whole Milk 5 Dry Whey/WPC 34%/Lactose/Casein 6 U.S. Dairy Cow Slaughter/Class Milk Prices/NDPSR/Futures 7
Non-Dairy Products: Margarine, non-dairy creamer, non-dairy sour cream, non-dairy flavored beverage and non-dairy whipped topping all of these are to be catego-rized as non-dairy fat 3. California Mastitis Test -20 min Samples should be scored using even numbers from 0 – 8 inclusive. 8 points per sample.
1996. Dairy Technology Division, NDRl, Karnal. Sherman P. 1970. Industrial Rheology. Academic Press. DT 514 DAIRY PROCESS BIOTECHNOLOGY 2 1 Objective To project the importance of biotechnology in dairy processing and impart knowledge on all aspects of dairy process biotechnology in production and
Oregon Dairy Industries 2019 Awards 2019 Dairy Princess Ambassador . Dairy plant sampler, 5 years. Pasteurizer equipment testing, 13 years. Dairy Specialist, 10 years. . Chocolate Milk Albertsons/Safeway Clackamas Albertsons/Safeway Bellevue Albertsons/Safeway San Leandro Alpenrose Dairy
3 Definitions Dairy businesses are businesses that develop, produce, market, or distribute dairy products. Dairy plants are any location where milk, cream, dairy products, or trade products are received for the purpose of manufacturing, processing, or packaging (T.C.A. 53-3-106). Dairy products must be derived from the milk of hooved mammals including, but not limited to: cattle,
DAIRY MARKET NEWS WEEK OF NOVEMBER 2 - 6, 2020 VOLUME 87, REPORT 45 DAIRY MARKET NEWS AT A GLANCE TABLE OF CONTENTS Product Highlights/CME/DMN at a Glance 1 Weekly CME Cash Trading/Butter Markets 2 Cheese Markets 3 Fluid Milk and Cream 4 Nonfat Dry Milk/Dry Buttermilk/Dry Whole Milk 5 Dry Whey/WPC 34%/Lactose/Casein 6 U.S. Dairy Cow Slaughter/Class Milk Prices/NDPSR/Futures 7
Oct 22, 2021 · DAIRY MARKET NEWS WEEK OF OCTOBER 18 - 22, 2021 VOLUME 88, REPORT 42 DAIRY MARKET NEWS AT A GLANCE TABLE OF CONTENTS Product Highlights/CME/DMN at a Glance 1 Weekly CME Cash Trading/Butter Markets 2 Cheese Markets 3 Fluid Milk and Cream 4 Nonfat Dry Milk/Dry Buttermilk/Dry Whole Milk 5 Dry Whey/WPC 34%/Lactose/Casein 6 U.S Dairy Cow
Oct 19, 2010 · The dairy sector is New Zealand’s top export earner and a key driver of economic growth. It accounts for nearly a quarter of total merchandise exports and approximately 7%-8% of GDP. The dairy processing industry is dominated by Fonterra Cooperative Ltd, the world’s largest dairy processor and New Zealand’s largest company.
