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  • Four U.S. Dairy Messages for Mexico This Week

    By USDEC March 14, 2017

    U.S. dairy officials are visiting Mexico City to affirm a mutually beneficial business partnership that still has plenty of upside. 

    MEXICO CITY --  U.S. Dairy Export Council President and CEO Tom Vilsack says he is emphasizing four positive messages this week as he and other U.S. dairy leaders meet with Mexican government officials, dairy organizations and media.

    “The whole purpose of this trip is to make the point that if the U.S. and Mexican dairy industries stay united, we both win,” says Vilsack. “It’s about celebrating this strong relationship for what it is, a partnership that has benefitted both countries.”

    On Wednesday afternoon, Vilsack will address the National Dairy Forum in Mexico City, an annual gathering of Mexican dairy farmers to discuss issues affecting the industry. Mexican state and federal government officials are also scheduled to attend.

    Jim Mulhern, president of the National Milk Producers Federation, and Michael Dykes, president and CEO of the International Dairy Foods Association, will join Vilsack at the gathering.  

    In an interview, Vilsack explained the four main messages he is trying to convey this week:

    1.  Mexico is a highly valued U.S. dairy customer.

    Mexico circle.jpg"Last year, Mexico was U.S. dairy’s largest export market, accounting for $1.2
    billion in sales, nearly a quarter of the our total export value generated worldwide. Mexican sales came in the form of milk powder, cheese, whey protein, lactose and other dairy products.  

    "Dairy exports to Mexico accounted for 3.7% of U.S. milk production last year―nearly 8 billion pounds or the milk from approximately 345,000 cows. Dairy has built a strong and dynamic relationship with Mexico over the past 15 to 20 years. Last summer, the U.S. Dairy Export Council and the National Milk Producers Federation met with a delegation of Mexican dairy producers and processors and developed a memorandum of understanding to continue to build upon and grow the relationship. The memorandum creates a U.S.-Mexico Dairy Alliance that will meet annually to exchange information, review industry trends, and identify and seek solutions for problems affecting either side, as explained here."

     2. It’s important to preserve what's good in the North American Free Trade Agreement (NAFTA).

    “We want to preserve what is good about NAFTA and we want to strengthen what needs to be strengthened,” Vilsack said. “Obviously, any agreement that has been around for a while has areas where there can be improvements.”

    The agreement has worked to the advantage of both countries.

    "There is growing consumer demand for dairy products in Mexico, and it is necessary for Mexico to import a substantial portion of its supply without harming its indigenous dairy industry. Since 1994, when NAFTA was implemented, Mexican milk production has increased by 58%, and all of that production increase has been absorbed by increased consumer demand in Mexico―thanks to joint promotional efforts by U.S. Dairy, Mexican producers and processors.

    "Because of NAFTA, U.S. dairy suppliers face zero tariffs and no quotas on shipments to Mexico, a rarity in agricultural trade.

    "The North American Free Trade Agreement has opened a major door to Mexico that we don't want slammed shut," Mulhern said in this joint USDEC/NMPF statement urging the Trump Administration not to cede export opportunities as the United States withdraws from the Trans Pacific Partnership and reconsiders its NAFTA role.

    3. Don’t concede to the European Union on geographical indications. 

    "The United States is the dominant dairy supplier to Mexico, with a greater-than-70% share of the import market," said Vilsack. "But the European Union and New Zealand are aggressively seeking free trade deals with Mexico that could severely erode the U.S. position, especially if NAFTA provisions are revised or removed.

    “We want to re-emphasize a concern that we have expressed to Mexican officials on a number of occasions that they cannot and should not give concessions to the EU as it relates to geographical indications that would undermine market access opportunities. 

    "Overly generous geographical indication terms would force farmers and food producers outside of Europe to rebrand familiar foods with unfamiliar names, particularly as it relates to cheese, as well as other foods like meat and wine. With common food names like parmesan, feta and provolone threatened, Mexican consumers would be confused by unfamiliar names if the products were from a non-EU country like the United States. Ultimately, it could lead to reduced cheese consumption, hurting both Mexican and U.S. cheese suppliers."  

    That conclusion is drawn from a study showing what would happen in the United States if geographical indications were granted. According to a recent study by Informa Economics, restricting the use of common food names through GIs in the United States would take billions from the U.S. dairy industry, slash cheese consumption and increase prices for consumers.

    4. The successful dairy partnership between Mexico and the United States can get even better.  

    “I am sure that there are things on both sides of the border, friction points that we can learn from them and they can learn from us, to try and improve and smoothen the trade relationship,” Vilsack said.

    "U.S. suppliers will continue to listen to the needs of their customers in Mexico and work to build overall demand for dairy products.

    “I think one of the reasons for going down (to Mexico this week) is to remind the Mexicans that in a trading relationship you have to be there, not just in the good times but also in the difficult times,” Vilsack said. “We have been with them and helped them through difficult times. We have worked with them to build market. This is not a situation where it is just basically us selling product; it’s us working with them to build demand (for dairy products across the board, which benefits the domestic Mexican dairy industry as well).”

    Mark O'Keefe is vice president of editorial services at the U.S. Dairy Export Council.

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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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