Dairy and Products Annual

An Expert's View about Food , Beverages and Tobacco in Mexico

Posted on: 30 Nov 2011

The expected recovery of Mexico’s dairy sector in marketing year (MY) 2012 will not take place as previously forecast as production levels across the range of dairy products are forecast at levels similar to MY2011.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 11/14/2011 GAIN Report Number: MX1083 Mexico Dairy and Products Annual MY2012 Forecast Flat Approved By: Dan Berman Prepared By: Gabriel Hernandez and Adam Branson Report Highlights: The expected recovery of Mexico?s dairy sector in marketing year (MY) 2012 will not take place as previously forecast as production levels across the range of dairy products are forecast at levels similar to MY2011. Price imbalances are upsetting the MY2011 dairy sector, but the Mexican Government (GOM) and Congress will continue supporting the industry as dairy products are a basic component of the Mexican diet. Domestic production does not meet demand and Mexico will continue importing dairy products, principally from the United States. Commodities: Dairy, Milk, Fluid Production: The Post/New MY2012 (January to December) fluid milk production forecast is that production will be similar to MY2011 levels. The increased price paid to producers by LICONSA1 coupled with financial support through specific government subsidy programs for small and medium-sized producers will drive the sector and keep producers in business in spite of increased production costs owing to higher feed prices and a stable number of milk cows. The government subsidy programs provide credit and access to credit for the purpose of infrastructure investments such as investments in genetics and better herd management practices. The Post/New fluid milk production estimate for MY2011 is revised downward from the USDA/Official estimate to reflect official data from Mexico?s Secretariat of Agriculture, Livestock, Rural Development, Fishery and Food (SAGARPA). This decrease is due to increased production costs and adverse weather conditions. Milk production costs increased due to high feed and energy prices. Also, the lack of moisture across almost all of Mexico through MY2011 caused a reduction in forage supplies thereby constraining production among small and medium-sized producers. The Post/New fluid milk production estimate for MY2010 remains unchanged from the USDA/Official estimate. The number of milk cows for MY2012 is forecast to remain at the same level as MY2011 based on industry estimates. The MY2011 number of milk cows was revised slightly lower from USDA/Official estimates due to the increased costs for animal feed and slow economic recovery that has pushed producers to decrease herd size. LICONSA?s price paid to dairy producers is used as a domestic reference price as many small and medium producers supply milk to LICONSA. According to industry sources, selling milk to LICONSA has provided producers with an opportunity to maintain their business during the past several years. LICONSA?s average weighted price for 2009 was 4.46 pesos (U.S. $0.33) per liter. This consisted of a base price equal to 4.20 pesos (U.S. $0.31) plus a quality bonus. In 2010, the average weighted price was 4.60 pesos (U.S. $0.34) pesos per liter. Owing to significant producer and Congressional lobbying, LICONSA announced recently that, effective October 9, 2011, the average weighted price it would pay producers would be 5.60 pesos (U.S. $0.42) per liter. Industry sources report the import of competitively-priced milk and economic troubles are forcing many small-scale milk producers out of business. The current cost of producing a liter of milk is between 4.60-5.20 pesos (U.S. $0.34-$0.39) per liter; however, private sector buyers are offering only around 3.70 pesos (U.S. $0.28) per liter. As a result, many small-scale producers have been halting production. 1 LICONSA is a trading company under the Secretariat of Social Development (SEDESOL) responsible for distributing milk to low-income households. MX1083 MY2012 Forecast Flat Page 2 Reportedly, 68 percent of the milk production cost is linked to animal feed. Industry sources report that in 2010, total feed production for the dairy sector was around 4.5 million metric tons (MMT) with a large portion of feed production originating from vertically integrated enterprises. Table 1. Mexico: Production of Feed and Feed Ingredients (000 Metric Tons) Calendar Year: 2006 2007 2008 2009 Forecast 2010 Compound Feed Capacity 32,900 33,500 34,000 34,000 34,000 Total Compound Feed Produced 25,600 26,100 26,600 27,000 27,300 ---- by integrated producers 16,158 16,435 16,751 16,997 17,200 ---- by commercial producers 9,442 9,665 9,849 10,003 10,100 Marketing Year: (000 Metric Tons) Feed Production by type of animal 2006 2007 2008 2009 Forecast 2010 Poultry 13,400 13,500 13,728 14,039 14,200 Pork 3,866 4,000 4,030 4,035 4,050 Beef Cattle 2,395 2,500 2,550 2,600 2,652 Dairy Cattle 4,322 4,400 4,503 4,504 4,543 Aquaculture 205 220 240 250 268 Source: National Council of feed producers and animal nutrition.(Consejo Nacional de Fabricantes de Alimentos Balanceados y de la Nutricion Animal, A.C.) Table 2. Mexico: Total fluid milk production by State, calendar year 2006-2010 and January- August 2011, in thousand liters. STATE 2006 2007 2008 2009 2010* 2011** MX1083 MY2012 Forecast Flat Page 3 AGUASCALIENTES 383,658 375,401 370,399 367,171 369,253 383,000 BAJA CALIFORNIA 166,868 207,915 193,422 179,795 174,027 167,635 BAJA CALIFORNIA SUR 44,634 43,150 46,451 46,104 44,323 40,716 CAMPECHE 34,241 35,517 35,029 36,271 36,146 37,594 COAHUILA 1,247,356 1,286,281 1,363,762 1,282,618 1,243,058 1,275,810 COLIMA 39,039 36,146 36,525 32,349 34,883 36,624 CHIAPAS 327,138 353,085 372,249 366,393 385,455 379,854 CHIHUAHUA 808,641 817,919 926,222 923,053 934,928 1,018,920 DISTRITO FEDERAL 13,138 10,058 12,322 13,652 13,643 13,905 DURANGO 1,014,535 1,019,227 1,036,581 959,716 1,001,137 1,013,790 GUANAJUATO 673,007 674,660 684,202 761,759 775,108 786,735 GUERRERO 81,868 82,001 81,552 84,157 86,892 83,672 HIDALGO 445,465 460,773 452,977 439,361 419,273 406,980 JALISCO 1,697,486 1,793,579 1,855,362 1,900,343 1,960,999 1,984,872 MEXICO 476,231 478,211 464,573 464,704 478,261 483,092 MICHOACAN 328,404 328,185 329,079 331,909 331,038 341,007 MORELOS 18,551 21,105 18,809 20,901 21,784 21,973 NAYARIT 64,506 64,536 61,974 60,130 60,742 63,460 NUEVO LEON 39,473 41,432 39,909 40,586 40,397 37,526 OAXACA 140,720 142,795 145,213 146,406 147,080 147,767 PUEBLA 367,963 384,707 384,285 395,211 403,100 412,601 QUERETARO 198,488 200,835 195,791 192,435 192,422 193,359 QUINTANA ROO 5,250 5,642 5,623 5,829 5,921 6,373 SAN LUIS POTOSI 147,591 140,630 141,828 132,285 130,899 131,326 SINALOA 82,067 88,633 93,779 95,943 102,081 104,588 SONORA 142,052 137,780 134,921 126,496 129,355 129,688 TABASCO 115,617 110,603 110,694 111,533 111,416 112,500 TAMAULIPAS 31,520 29,224 30,209 32,326 30,242 29,550 TLAXCALA 99,158 110,258 110,924 120,356 115,223 117,876 VERACRUZ 681,809 692,754 697,288 708,230 722,465 732,227 YUCATAN 6,769 5,557 5,608 4,366 3,441 2,791 ZACATECAS 165,309 167,383 163,293 166,655 171,703 180,024 NACIONAL 10,088,551 10,345,982 10,498,994 10,549,038 10,676,693 10,877,835 Lagunera Area /1 2,122,092 2,205,498 2,255,272 2,090,707 2,092,807 2,133,158 Source: SIAP-SAGARPA: The Agro-food and Fishery Information Service, Secretariat of Agriculture, Livestock, Rural Development, Fishery and Food (SAGARPA) *SAGARPA's definitive figures for 2010 **SAGARPA'S preliminar figures for 2011 1/ Durango and Coahuila region Highlighted states/area are the top fluid milk producers Consumption: MX1083 MY2012 Forecast Flat Page 4 The Post/New MY2012, total fluid milk consumption forecast (domestic and factory use) is forecast at the same levels as MY2011. The Post/New MY2011 total fluid milk consumption is revised downward 1.6 percent from the USDA/Official estimate. The MY2010 total fluid milk consumption estimate remains unchanged from USDA/Official estimates. Consumption of Ultra High Temperature (UHT) and pasteurized milk accounts for 80 percent of total fluid milk consumption. Since 2006 LICONSA has been purchasing domestic fluid milk as a form of import substitution for non-fat dry milk (NFDM) and it is highly likely that these practices will continue through 2012. Middle and high-income consumers have been substituting fluid milk consumption with more expensive and value-added products as sources of dairy protein in their diets. Low-income consumers are switching from fluid milk consumption to lower priced products like dairy formulas. Industry sources report that per capita consumption of dairy products (milk, cheese, yogurt, etc.) is estimated now at 140 kilograms (63.5 pounds). Consumption levels are correlated with the continued recovery of consumer purchasing power as well as changing demographics (e.g., aging of the population). The consumption trend is for increasing consumption of added value dairy products such as yoghurts, cheeses as well as of (UHT) milk. Prices: During the first quarter of 2011, LICONSA paid the congressionally mandated minimum price of 4.40 pesos per liter (U.S. $0.37) to producers plus an additional 0.30 peso per liter premium for quality. However, due to continued pressure from producers and the Mexican Congress, LICONSA started paying 4.70 pesos (U.S. $0.35) per liter plus an additional 0.30 pesos (U.S. $0.02) per liter quality premium. Then, on October 9, 2011, LICONSA announced a 0.60 pesos (U.S. $0.04) per liter increase to the price paid to producers in order to benefit small and medium-sized producers for a final price of 5.60 pesos (USD $0.42) per liter. On the consumer price side, LICONSA announced that during 2011 the price of milk distributed to low- income households will remain at the same price of 4.00 pesos per liter (U.S. $0.30) in spite of the increase in producer price payments. Although milk production costs are increasing due to higher grain prices, these costs are not likely to be passed onto consumers as milk processors understand that consumption patterns begin changing when prices increase by greater than 3 percent. Trade: Mexico is a milk production deficit nation and will continue to be an attractive market for U.S. dairy and dairy product exporters. As such, the United States will continue to be the primary supplier of fluid milk to Mexico. The Post new fluid milk import forecast for MY2012 is that volumes will be similar to revised MY2011 levels. The Post/New MY2011 fluid milk import estimate is revised downward from the USDA/Official estimate due to higher prices resulting from currency devaluation and the increase in consumption of other processed dairy products. The Post/New MY2010 fluid milk import estimate remains unchanged from the USDA/Official estimate. MX1083 MY2012 Forecast Flat Page 5 Most fluid milk imports are intended for cities along the northern Mexican border since opportunities for sales beyond those areas are limited by transportation costs and cold chain infrastructure constraints. The Post/New MY2012 fluid milk export estimate remains the same as MY2011 at 10,000 MT. This is due to the relatively high price of Mexican fluid milk and the cumbersome registration process for new companies to be certified as eligible to export. Stocks: No stocks are held due to the lack of refrigeration storage space among producers and end-users. As such, end-users utilize just-in-time delivery for those products which enter value-added processes. Production, Supply and Demand Data Statistics: Dairy, Milk, Fluid Mexico 2010 2011 2012 Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 USDA Official New Post USDA Official New Post USDA Official New Post Cows In Milk 6,480 6,480 6,585 6,500 6,500 Cows Milk Production 11,033 11,033 11,060 10,878 10,878 Other Milk Production 168 168 168 165 165 Total Production 11,201 11,201 11,228 11,043 11,043 Other Imports 41 41 43 39 39 Total Imports 41 41 43 39 39 Total Supply 11,242 11,242 11,271 11,082 11,082 Other Exports 9 9 10 10 10 Total Exports 9 9 10 10 10 Fluid Use Dom. Consum. 5,167 5,167 5,100 4,072 4,072 Factory Use Consum. 6,066 6,066 6,161 7,000 7,000 Feed Use Dom. Consum. 0 0 0 0 0 Total Dom. Consumption 11,233 11,233 11,261 11,072 11,072 Total Distribution 11,242 11,242 11,271 11,082 11,082 1000 HEAD, 1000 MT Commodities: Dairy, Cheese Production: As a result of improved purchasing power and the availability of domestic fluid milk, the Post/New total cheese production forecast for MY2012 (January-December) is forecast to increase by 1.2 percent over MY2011 levels. The Post/New estimate for MY2011 remains the same as USDA/Official estimate and is 1.1 percent higher than MY2010 levels. This is due to the increased availability of imported and domestic raw materials for cheese production and a better-than-expected recovery of consumer purchasing power. The same factors that influenced MY2011 production and consumption are expected to prevail in MY2012. Specifically, the continued consumer preference for inexpensive yellow, Panela MX1083 MY2012 Forecast Flat Page 6 and fresh cheeses as well as increased consumption of aged-cheese products is likely to continue. During MY2011, Mexican aged-cheese production was supported by the recovery of consumers? incomes who demanded greater volumes of cheeses as imported cheeses (principally U.S. cheeses) were more costly due to the retaliatory duties imposed on imported U.S. aged cheeses (see policy section labeled ?retaliatory duties on U.S. cheese exports? of this report). In addition, increased demand within the restaurant sector will encourage greater commercial cheese processors and push increased production. The Post/New estimate for MY2010 cheese production remains unchanged at 264,000 MT from the USDA/Official estimate. Some cheese manufacturers are beginning to adopt new production practices to promote whey production as a by-product obtained from fresh cheese production (principally Panela and Oaxaca). This presents an opportunity for cheese manufacturers to capture profit and reduce environmental waste as whey is traditionally discarded. Consumption: The Post/New MY2012 total cheese consumption forecast shows marginal increases due to greater demand from low and lower-middle income consumers of fresh cheese. Additionally, the consumption of aged cheese among high-middle and high-income consumers is expected to be greater than MY2011. The Post/New MY2011 consumption estimate is unchanged from the USDA/Official estimate. Approximately 75 percent of cheese consumption over the past several years has been from domestic cheese processors. Consumption trends show positive growth, however, as more cheese varieties are in greater demand due to lifestyle changes that include prepared foods for breakfast and lunch with some cheese component. Trade: On October 21, 2011, Mexico lifted retaliatory duties applied to four HTS codes for cheese (see MX1076 Mexico Eliminates Trucking Retaliation Tariffs). The Post/New MY2012 forecast is for imports to increase by 5.5 percent relative to MY2011 levels. Although the retaliatory tariff duties imposed by the GOM made cheeses from the four HTS codes more expensive, middle and high-income consumers continued demanding them during MY2011. Consumers continue demonstrating a preference for imported cheeses. This preference is spurred, also, by Mexico?s economic recovery. The Post/New import estimate for MY2010 remains unchanged from the USDA/Official estimate. Cheese exports forecast for MY2012 are expected to maintain existing levels from MY2011. Medium- sized cheese processors are exporting to South America. The Post/New export estimate for MY2010 remains unchanged from the USDA/Official estimate. Production, Supply and Demand Data Statistics: Dairy, Cheese Mexico 2010 2011 2012 Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 USDA Official New Post USDA Official New Post USDA Official New Post Beginning Stocks 0 0 0 0 0 Production 264 264 267 267 270 Other Imports 80 80 90 90 95 Total Imports 80 80 90 90 95 Total Supply 344 344 357 357 365 MX1083 MY2012 Forecast Flat Page 7 Other Exports 6 6 7 7 7 Total Exports 6 6 7 7 7 Human Dom. Consumption 338 338 350 350 358 Other Use, Losses 0 0 0 0 0 Total Dom. Consumption 338 338 350 350 358 Total Use 344 344 357 357 365 Ending Stocks 0 0 0 0 0 Total Distribution 344 344 357 357 365 1000 MT Commodities: Dairy, Butter Production: Statistics for butter and butterfat production are combined in the PS&D table. The Post/New MY2012 butter (and butterfat) production forecast is 185,000 MT. This is slightly lower than the Post/New and USDA/Official MY2011 estimate. The Post/New MY2011 estimate for butter production stems from the availability of fluid milk as well as improved processor profits resulting from higher international butterfat prices. Production for MY2010 remains unchanged from USDA/Official estimates. Consumption: The Post/New MY2012 butter and butterfat consumption forecast is a 3.1 percent decrease from the MY2011 estimate and reflects a contraction in imports. During MY2011, the baking, confectionary and food processing industries suffered due to price increases for imported raw materials. Also, these industry players have been affected by the peso devaluation making imports more expensive along with higher prices attributed to low worldwide inventories. The Post/New estimate for MY2010 remains unchanged from the USDA/Official estimates. Trade: The Post/New MY2012 import forecast is a decrease by 5,000 MT from the USDA/Official MY2011 estimate of 35,000 MT. The Post/New import estimate for MY2011 remains the same as the USDA/Official estimate. Imports for MY2011 were revised downward from MY2010 due to ample domestic production and reduced butterfat import needs for the baking and confectionary sector as these sectors substituted for other raw materials. The Post/New total import estimate for MY2010 remains unchanged from the USDA/Official estimate. New Zealand will continue to be the principal supplier of butterfat to Mexico for MY2012 and MY2011. New Zealand will be followed by the United States, Uruguay, and Australia. Production, Supply and Demand Data Statistics: Dairy, Butter Mexico 2010 2011 2012 MX1083 MY2012 Forecast Flat Page 8 Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 USDA Official New Post USDA Official New Post USDA Official New Post Beginning Stocks 0 0 0 0 0 Production 182 182 187 187 185 Other Imports 49 49 35 35 30 Total Imports 49 49 35 35 30 Total Supply 231 231 222 222 215 Other Exports 0 0 0 0 0 Total Exports 0 0 0 0 0 Domestic Consumption 231 231 222 222 215 Total Use 231 231 222 222 215 Ending Stocks 0 0 0 0 0 Total Distribution 231 231 222 222 215 1000 MT Commodities: Dairy, Milk, Nonfat Dry Production: The Post/New MY2012 production forecast for NFDM is expected to remain at MY2011 levels due to the stable production of fluid milk and the stable demand from the dairy industry for production of other dairy products. As previously reported, the production of NFDM is more expensive than whole milk powder (WMP) and it is produced only when there is seasonal overproduction of fluid milk. Industry sources report only seven companies have facilities to manufacture NFDM and this is a limitation on production expansion. The Post/New production estimate for MY2011 is similar to the MY2010 level (13,000 MT) due to reduced availability of fluid milk that year. Sources report that Mexico?s milk powder production may be able to increase marginally once a new plant in the state of Jalisco is fully operational and capable of managing seasonal surpluses that occur during rainy seasons. (See Dry Whole Milk Powder Production for additional information). Consumption: The Post/New NFDM consumption forecast for MY2012 calls for a slight increase in comparison to the MY2011 estimate due to sustained demand from the industry for production of added-value products. The Post/New consumption estimates for MY2011 and MY2010 are unchanged from USDA/official estimates. Sources report that the principal consumers of NFDM are dairy processors who reconstitute the material and sell it as pasteurized or UHT milk. Some, as well, sell NFDM into the confectionary industry. Trade: Mexico?s imports of NFDM are forecast to grow slightly in MY2012 as domestic production is not sufficient for domestic demand. The Post/New import estimates for MY2011 and MY2010 are unchanged from the USDA/Official estimate. MX1083 MY2012 Forecast Flat Page 9 As previously reported, during December 2010, the Secretariat of Economy (SE) announced TRQs for milk powder (and dairy blends) for 2011. (See 2010 GAIN MX0095 & MX0096). It is expected that 70 percent of NFDM imports will be rehydrated into fluid milk, UHT milk, and other added-value products such as chesses, yogurts, and ice cream formulations. The remaining 30 percent is used by the bakery sector. Sources report that these industries prefer NFDM as it is more easily used in the preparation of a number of products. Stocks: LICONSA used to be the largest owner of milk powder stocks. Due to industry pressure, however, LICONSA has switched to purchasing domestic fluid milk and is reducing its consumption of NFDM and its need to maintain stocks. This shift towards fluid milk also led LICONSA to abandon keeping stocks of NFDM since it was no longer the principal ingredient in its products. Production, Supply and Demand Data Statistics: Dairy, Milk, Nonfat Dry Mexico 2010 2011 2012 Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 USDA Official New Post USDA Official New Post USDA Official New Post Beginning Stocks 0 0 0 0 0 Production 13 13 13 13 13 Other Imports 155 155 155 155 157 Total Imports 155 155 155 155 157 Total Supply 168 168 168 168 170 Other Exports 0 0 0 0 0 Total Exports 0 0 0 0 0 Human Dom. Consumption 168 168 168 168 170 Other Use, Losses 0 0 0 0 0 Total Dom. Consumption 168 168 168 168 170 Total Use 168 168 168 168 170 Ending Stocks 0 0 0 0 0 Total Distribution 168 168 168 168 170 1000 MT Commodities: Dairy, Dry Whole Milk Powder MX1083 MY2012 Forecast Flat Page 10 Production: The Post/New MY2012 powdered dry whole milk powder (WMP) production forecast is that levels will be the same as MY2011. This is a result of the sustained availability of fluid milk and because of the reduction in imports from LICONSA. The Post/New estimate for MY2011 total dry WMP production decreased marginally from USDA/Official estimates because of increased LICONSA purchasing of domestic fluid milk that has, in turn, lowered dry WMP production. As previously stated, the production of WMP depends on the availability of fluid milk, especially, the seasonal over supply of fluid milk. As an effort to promote the well being of the milk sector, investors and producers constructed a milk dehydration plant in the state of Jalisco. The plant uses milk surpluses from the market in order to avoid price declines and will increase the supply of dehydrated milk in the domestic market. The facility should dehydrate whey, lactose, and other milk byproducts in the facility, as well. Additionally, the plant will improve the environment as it will be a recollection and processing center for whey obtained from the cheese production process. Consumption: Dry WMP consumption for MY2012 is forecast to decrease slightly from MY2011 levels as consumer purchasing power recovery allows middle and high-income consumers to buy processed and added- values dairy products instead of WPM. Low-income consumers are the traditional market covered by LICONSA and rehydrated milk made from WMP. The Post/new MY2010 consumption estimate remains unchanged from USDA/Official estimate. Trade: MY2012 imports are forecast at 20,000 MT. Although LICONSA has been switching to fluid milk purchases during MY2011, the dairy demand from low-income consumers has led to slightly higher imports for dry WMP and resulted in a slight increase in the Post/New MY2011 estimate from the USDA/Official estimate. Production, Supply and Demand Data Statistics: Dairy, Dry Whole Milk Powder Mexico 2010 2011 2012 Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 USDA Official New Post USDA Official New Post USDA Official New Post Beginning Stocks 0 0 0 0 0 Production 173 173 170 168 168 Other Imports 15 15 20 22 20 Total Imports 15 15 20 22 20 Total Supply 188 188 190 190 188 Other Exports 7 7 7 7 7 Total Exports 7 7 7 7 7 Human Dom. Consumption 181 181 183 183 181 Other Use, Losses 0 0 0 0 0 Total Dom. Consumption 181 181 183 183 181 Total Use 188 188 190 190 188 Ending Stocks 0 0 0 0 0 Total Distribution 188 188 190 190 188 MX1083 MY2012 Forecast Flat Page 11 1000 MT Commodities: Dairy, Butter Dairy, Cheese Dairy, Dry Whole Milk Powder Dairy, Milk, Fluid Dairy, Milk, Nonfat Dry Policy: General Tariffs Currently, all U.S. dairy product exports enter Mexico duty-free. In addition, in an effort to meet the demand for dairy products, the GOM opened a TRQ for importing powdered milk at zero duty. (See GAIN reports MX0096 and MX0095.) Retaliatory duties on U.S cheese exports On October 21, 2011, the Secretariat of Economy (SE) published in Mexico?s Federal Register (Diario Oficial) an announcement lifting the retaliatory duties, previously imposed on the following HTS codes: 0406.10.01 Fresh (Unripened or Uncured) Cheese, Including Whey and Curd; 0406.30.99 Processed cheese not grated or powdered; 0406.90.04 Cheese and curd. Other cheese. Hard or semi-hard, containing by weight of fat exceeding 40%: only Parmegiano-Reggiano or Grana, containing by weight of water in non-fatty matter exceeding 47%; only Danbo Edam, Fontal, Fontina, Fynbo, Gouda, Havarti, Maribo, Samsoe, Esrom, Italic, Kernhem, Saint-Nectaire, Saint-Paulin and Taleggio, with a weight of water content in non-fatty matter exceeding 47 % but not exceeding 72%, and; 2106.90.08 Food preparations with a dairy solids content above of 10% in weight. NOM-155 SAGARPA?s Livestock General Coordinator announced that, as a result of the meetings between SAGARPA and SE, the Mexican Official Norm NOM-155-SCFI (that regulates the quality of milk and dairy products), was modified and delivered, on May 6, 2011, to interested parties within the dairy sector for comment. After the completion of its appraisal, the draft must then be prepared for final publication in Mexico?s Federal Register. LICONSA Authorities from LICONSA and from the Mexican trust, Financiera Rural (FIRA), signed a memorandum of cooperation for the implementation of a program that will allow dairy producers, who currently sell product to LICONSA, to access credit for the purpose of infrastructure improvements. MX1083 MY2012 Forecast Flat Page 12 The result of this measure will be a better quality of milk produced and eventually a reduction in the costs of production. Mexican Potential for Exports to the United States Mexico seeks market access for Grade ?A? fluid milk to the United States. The information contained in the following links provides helpful information to potential Mexican exporters so as to understand the permitting process for exporting. Register with FDA Milk Safety Information Milk Inspections Interstate Milk Shippers List Free Trade Agreements (FTA) The Mexican Agreement for the Commercial Integration with Peru is in the last stages of negotiations and awaits final approval from the Mexican Congress. Some dairy products may be included in the Peru FTA, but all details are subject to negotiation until the agreement is published in the Mexican Federal Register. Marketing: In 2010, the total dairy products (UHT and pasteurized fluid milk, cheese, yoghurt, cream, chilled dairy snacks, and condensed/evaporated milk) market size was estimated at U.S. $9.65 billion. The industry is considered highly fragmented with a large number of small-scale artisan producers that distribute products locally and regionally. Fluid milk processing, however, is dominated by two brands, Lala and Alpura. Based on information from 2009, the following represents the market share held by various companies for a subset of dairy product categories. Milk (pasteurized and UHT) Company shares, by retail value, 2009 Company Market Share Grupo Industrial Lala SA de CV 44.80% Ganaderos Productores de Leche Pura SA de CV 24.20% Others 31.00% Total 100% Cheeses Company shares, by retail value, 2009 Company Market Share Sigma Alimentos SA de CV 17.10% Grupo Industrial Lala SA de CV 12.30% Derivados de Leche La Esmeralda SA de CV 9.70% Ganaderos Productores de Leche Pura SA de CV 6.00% Chilchota Alimentos SA de CV 4.30% MX1083 MY2012 Forecast Flat Page 13 Nestl? SA 4.10% Others 46.50% Total 100% Yoghurt and Sour Milk Drinks Company shares, by retail value, 2009 Company Market Share Groupe Danone 24.20% Yakult Honsha Co. Ltd. 23.80% Sodiaal SA 14.20% Grupo Industrial Lala SA de CV 12.10% Nestl? SA 10.40% Others 15.30% Total 100% The U.S. Dairy Export Council (USDEC) is active in promoting the U.S. dairy industry in Mexico. In addition, the Foreign Agricultural Service (FAS) Agricultural Trade Offices (ATOs) promote U.S. dairy exports, as well. The ATOs and USDEC develop promotion and sales opportunities for U.S. dairy products in the Mexican market. USDEC, as well, organizes buying missions for potential Mexican importers/distributors to visit U.S. suppliers. For further information, direct marketing questions to: U.S. Dairy Export Council (USDEC) Circuito M?dicos No. 55 Interior 302 Ciudad Sat?lite, Naucalpan, Estado de M?xico, 53100 M?xico http://www.usdec.org Agricultural Trade Office, Mexico City Liverpool 31, Col. Juarez C.P. 06600 M?xico, D.F. Phone: (011-52-55) 5140-2600 atomexico@fas.usda.gov http://www.mexico-usda.com Agricultural Trade Office, Monterrey Blvd. Diaz Ordaz No. 140, Torre 2, Piso 7 Col. Santa Maria C.P. 64650 Monterrey, Nuevo Leon (011-52-81) 8333-5289 atomonterrey@fas.usda.gov http://www.mexico-usda.com MX1083 MY2012 Forecast Flat Page 14 Author Defined: For More Information FAS/Mexico Web Site: We are available at www.mexico-usda.com or visit the FAS headquarters' home page at www.fas.usda.gov for a complete selection of FAS worldwide agricultural reporting. FAS/Mexico YouTube Channel: Catch the latest videos of FAS Mexico at work http://www.youtube.com/user/ATOMexicoCity Other Relevant Reports Submitted by FAS/Mexico: Report Subject Date Number Submitted MX1076 Mexico Eliminates Trucking Retaliation Tariffs Against Ag. 10/21/2011 Products MX1042 Market Concentration in Selected Agricultural and Food 5/25/2011 Subsectors MX1019 Mexico Consolidates Labeling Requirements for Milk and Hams 3/16/2011 MX0096 Mexico Announces 2011 Import TRQ for Dairy Preparations 12/20/2010 MX0095 Mexico Announces 2011 TRQ for Milk Powder Imports from 12/20/2010 WTO Members MX0084 Guidelines to Harmonize Import Inspection of Agricultural 11/15/2010 Products MX0076 New Mexican Regulation for Milk and Milk Products 10/18/2010 Useful Mexican Web Sites: Mexico's equivalent to the U.S. Department of Agriculture (SAGARPA) can be found at www.sagarpa.gob.mx , equivalent to the U.S. Department of Commerce (SE) can be found at www.economia.gob.mx and equivalent to the U.S. Food and Drug Administration (SALUD) can be found at www.salud.gob.mx. These web sites are mentioned for the readers' convenience but USDA does NOT in any way endorse, guarantee the accuracy of, or necessarily concur with, the information contained on the mentioned sites. MX1083 MY2012 Forecast Flat Page 15 MX1083 MY2012 Forecast Flat Page 16
Posted: 30 November 2011

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