Why Mexico remains important for US dairy exports

In Mexico, dairy and specifically cheese is widely consumed as part of the culture. However, the country does not produce enough to meet domestic needs. This is due to limited milk production due to the deserts and mountainous environment.

Milk production
Mexican milk production has grown steadily in recent years. In 2020, milk supply grew by 2,3% to approximately 2,5 billion kilos. In the first half of 2021, production was 2,4% higher than in 2020. The expansion is a result of expanding the dairy herd. In 2020, approximately 50.000 cows were added to the herd. Another 50.000 are expected to be added this year, bringing the herd to 6,6 million, according to the United States Department of Agriculture (USDA).

Mexican demand for dairy has not decreased despite challenges related to the corona crisis. On the contrary, the demand for dairy has continued to grow. The USDA estimates that Mexican dairy consumption in 2020 was about 12.947 million tons. This is an increase of 0,5% compared to 2019 (after converting the leap year). The consumption of cheese and butter in particular drove total dairy consumption. The USDA expects consumption to rise another 1,1% this year.

Import
To meet domestic needs, Mexico typically imports many U.S. dairy products. In the first 5 months of 2021, approximately 277,6 million kilos of dairy were imported from the US. This is an increase of 12,8% compared to the same period last year, although imports were limited last year due to the corona crisis. Imports are still below the levels of 2018 and 2019.

Given its geographic location and favorable trade relations, the United States continues to play a major role in filling the gap in the Mexican dairy market.