Guest Editorial
Forging an international partnership

by Tom Suber

Tom Suber is president of the U.S. Dairy Export Council. He contributes this column exclusively for Cheese Market News®.

For 17 years, the United States and Mexico dairy industries have sought a closer trading relationship. Back in the early ’90s, the path was paved with two-way trade and information missions between the two industries, facilitated first by the National Dairy Board and then by the U.S. Dairy Export Council (USDEC) and its local office representative.

Over the years, trade missions have been supplemented by more advanced tactics: bringing buyers and sellers together at trade shows and other events; delivering product applications seminars and technical papers to Mexican buyers; and conducting retail and foodservice promotions that enhance the image of U.S. dairy products and increase local sales of U.S. dairy products and ingredients.

The investment and effort has paid off: In 2006, U.S. dairy exports to Mexico were valued at $444 million, nearly three times as much as we sold in 2000. Most significantly, none of last year’s exports used government export subsidies.

And now, six months before the final phase of NAFTA is implemented — the last tariffs and quotas for shipments of U.S. skim milk powder into Mexico come off on Jan. 1, 2008 — the U.S. and Mexican industries have pledged to work together to address issues of concern to both sides and facilitate commercial trade.

Late last month, key officials from each country came together at a summit in Mexico City. USDEC directors and staff were joined at the table by producer and staff representatives from National Milk Producers Federation (NMPF), Dairy Management Inc. (DMI), National Dairy Board, a major exporter and senior U.S. government officials. The delegation shared updates on U.S. and global dairy market conditions and participated in frank dialogue with officials from Asociacion Nacional de Productores de Leche (ANGLAC), Mexico’s dairy farmer organization, and senior representatives of Mexico’s Department of Agriculture. Similar meetings were later held with Cámara Nacional de Industriales de la Leche (CANILEC), the dairy processor organization, plus Mexican congressional representatives and the Mexican Secretary of Agriculture.

The culmination of the first conference was a Memorandum of Understanding (MOU) between ANGLAC and NMPF that lays out a course of consultations and prospective programs. The MOU is a tangible article that establishes goodwill and provides a forum for discussion and development of programs to pursue shared objectives.

Meeting at least annually, the newly formed North America Dairy Industry Partnership (NADIP) will seek to prevent circumvention of NAFTA rules of origin to ensure that the benefits of NAFTA accrue to just the two countries; to bolster the use of existing standards of identity and quality among Mexican dairy products; to develop mutually beneficial trade; to eliminate export subsidies; and to review market conditions.

In addition, the two parties will work together to develop and implement a generic program to increase dairy consumption in Mexico, driven and managed by the Mexican dairy industry. Though details have yet to be fully worked out, the program may be modeled after the clinical science that supports DMI’s “3-A-Day” program.

Mexican per-capita consumption has increased in recent years in certain dairy categories, but overall use remains below the U.N. Food and Agriculture Organization (FAO) suggested intake levels. Fluid milk consumption is less than half of what it is in the United States and lags behind levels seen in other Latin American countries like Brazil and Argentina as well. Cheese use is just one-seventh of what it is in the United States. In short, consumption has room to grow.

The working title for this model program is “Lactiva 3.” Like the U.S. campaign, its goal would be to increase dairy demand in Mexico on a nutrimarketing platform, communicating health and nutritional benefits. USDEC (and its major funder, DMI) are prepared to share their experiences from the U.S. program, as well as the supporting science and marketing materials.

If the program goes as planned, it will be a win-win for both sides of the border. Stronger Mexican dairy consumption creates sales opportunities for Mexican dairy producers, as well as U.S. farmers, processors and exporters.

Mexico has been our most important export market for many years. With the signing of this partnership agreement, we have formalized our close working relationship and signaled a commitment to growing both our businesses in the future.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.