The U.S. Dairy Exporter Blog: Market Analysis, Research & News

  • For World Milk Day: Economic Facts About U.S. Dairy Exports to Mexico

    By Mark O'Keefe May 31, 2017

    Turn south on June 1 to raise a glass to our No. 1 export market, supporting an estimated 25,000 American jobs.

     

    Mexico -- 15 Dairy Statistics.png

    Think of 1,500 American dairy farms. 

    Think of an estimated 25,000 jobs across the United States.  

    Think of, and thank, Mexico, because as the long list of facts below shows, those farms and jobs are just part of the economic impact of the U.S. dairy industry's No. 1 export market, worth $1.2 billion last year. 

    The mutually beneficial dairy partnership between the United States and Mexico is on display this week for World Milk Day, a June 1 event created by the United Nations to acknowledge the nutrition, sustainability and economic development provided by the dairy sector worldwide.

    World Milk Day activities in Mexico

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    In Mexico City, USDEC is working with the National Chamber of Industrial Milk (CANILEC) and the National Confederation of Livestock Organizations (CNOG) to co-sponsor several activities, including a:

    • Wednesday news conference at the American Hotel addressing the importance of milk and dairy nutrition for a healthy lifestyle.
    • Thursday seminar for academics and the medical community on milk, dairy products and nutrition, held at the National Nutrition Institute of Mexico.
    • Sunday soccer event where milk, cheese, yogurt and other dairy products will be on display and distributed to an anticipated 500 athletes ages 6 to 16, and their families.

    This coordinated effort didn't happen overnight.

    It is a byproduct of a March trip to Mexico City by three U.S. dairy leaders: Tom Vilsack, USDEC president and CEO; Jim Mulhern, president and CEO of the National Milk Producers Federation; and Michael Dykes, president and CEO of the International Dairy Foods Association.

    In meetings and speeches, the dairy leaders cited statistics to make the case that Mexico is more than just a customer for the U.S. dairy industry. Mexico is a vital economic partner.

    Sources for the data include the U.S. Department of Agriculture, the U.S. Department of Commerce, USDEC and NMPF. The number of jobs created by exports to Mexico were calculated by NMPF economist Peter Vitaliano applying 2016 data to formulas established by the U.S. Bureau of Economic Analysis.

    Shareable facts about U.S. dairy exports to Mexico

    On World Milk Day, consider that Mexico:

    • Puts no tariffs on U.S. dairy products. Because of NAFTA, U.S. dairy suppliers face zero tariffs and no quotas on shipments to Mexico, a rarity in agricultural trade. For the top two U.S. dairy exports to Mexico—NDM/SMP and cheese—other dairy exporters face out-of-quota tariffs of 80 percent and 60 percent, respectively.
    • Is the top U.S. dairy export market. Mexico accounted for $1.2 billion in U.S. dairy sales in 2016—nearly a quarter of total U.S. dairy export value, more than any other U.S. dairy export market.
    • Supports U.S. farmers. It takes the equivalent of 1,500 average-sized U.S. dairy farms to supply the volume of milk we ship to Mexico, our No. 1 market.
    • Heavily relies on U.S. Dairy. The United States is the dominant dairy supplier to Mexico, with a greater-than-70 percent share of the import market. But the European Union and New Zealand are aggressively seeking free trade deals with Mexico that could severely erode the U.S. position were the provisions of NAFTA revised or removed.
    • Provides a large U.S. milk powder market. Mexico accounted for 47 percent of U.S. nonfat dry milk/skim milk powder (NDM/SMP) export volume in 2016.
    • Is the largest U.S. cheese buyer. Mexico purchased 31 percent of U.S. cheese exports in 2016.
    • Is the biggest U.S. fluid market. Mexico accounted for 32 percent of U.S. fluid milk/cream exports last year.
    • Remains a vital outlet for U.S. milk. In 2016, 3.7 percent of U.S. milk production—nearly 8 billion lbs.—went into Mexico in the form of milk powder, cheese, whey protein, lactose and other dairy products.
    • Creates thousands of U.S. jobs. Dairy exports to Mexico supported 25,000 U.S. jobs in 2016, according to an estimate using economic multipliers.
    • Contributes broadly to the U.S. economy. Dairy exports to Mexico contributed $3.6 billion in economic impact to the United States last year.
    • Has a growing dairy sector. Domestic Mexican milk production posted a compound annual growth rate of 1.6 percent over the past five years, significantly greater than major Latin American dairy producers Argentina and Brazil.
    • Features an expanding food sector. One of the bright spots in Mexico’s economy is the food processing sector, a major user of dairy ingredients. Mexico’s food industry has averaged annual growth of nearly 4 percent over the past five years.
    • Is a sizable milk producer in its own right. In 2016, Mexican farmers produced 26 billion pounds of milk, equal to about 12 percent of U.S. milk production, a few billion pounds less than the annual milk output of Wisconsin.
    • Can't keep up with growing demand. Despite domestic farmer growth, Mexico remains a deficit milk producer, relying on imports to satisfy about one-third of its annual dairy needs. Domestic dairy demand is growing faster than production.
    • Has plenty of upside. Current per capita consumption not only remains less than half of U.S. per capita consumption, it also falls short of many of its Latin American neighbors, including Argentina, Brazil, Chile and Costa Rica.

    Raise that glass of milk

    WMD logo50.pngAs part of the global celebration for World Milk Day, people around the world are encouraged to raise a glass of milk on Thursday. Here in the United States, it might be appropriate to make an additional gesture. Turn south and raise that glass to our No. 1 export market, supporting an estimated 25,000 American jobs.

    Mark O'Keefe is vice president of editorial services at the U.S. Dairy Export Council. He accompanied U.S. dairy leaders on a March 13-17 trip to Mexico City.

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    The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.  .

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