Dairy Strategy Targets Structural Deficit Amid Import Dependence

Mexico’s federal government and leading dairy processors have launched a joint strategy to address the country’s structural milk supply deficit, strengthen commercialization mechanisms and expand domestic production capacity. The initiative seeks to reduce reliance on imported powdered milk, primarily from the United States, amid persistent price differentials and competitiveness gaps affecting national producers. 

The Ministry of Agriculture and Rural Development (SADER), the Milk for Well-Being Program, the National Livestock Confederation (CNOG) and the national dairy industry agreed to develop a joint action plan to guarantee milk commercialization, ensure supply and promote sustainable growth across the production chain.

The National Chamber of Milk Industry Producers (CANILEC) and its main members including Alpura, DANONE, LALA, Lactalis, Nestlé, Santa Clara and Sigma–which together purchase more than 90% of national production–agreed to work with SADER, the Milk for Well-Being Program and CNOG on a plan addressing priority issues such as strengthening milk production, improving supply chain efficiency, providing certainty for producers and establishing permanent mechanisms for dialogue and follow-up.

Pablo Lemus, Governor of Jalisco, and Teresa Jiménez, Governor of Aguascalientes, confirmed that their states will join the federal government’s action plan. Mexico’s leading milk-producing states are Jalisco with 21% of national output, Coahuila with 12%, Durango with 11%, Chihuahua with 9%, Guanajuato with 7%, and Veracruz with 6%; the remaining states account for 34% of total production. Mexico ranks 13th worldwide in bovine milk production, with an annual volume exceeding 12L billion.

Structural Supply Gap Deepens Import Dependence and Price Pressures

National milk consumption is estimated at between 95L and 124L per capita per year. However, the country faces a deficit: while it produces around 12L billion annually, total consumption is close to 16L billion. This gap has positioned Mexico as one of the world’s leading importers of powdered milk, primarily from the United States. In powdered form, US milk costs approximately MX$8.5/L equivalent (US$0.49/L), compared to MX$10.20/L (US$0.59/L) domestically, creating strong competitive pressure on national producers.

In this context, farmers’ organizations such as the National Union of Agricultural Workers (UNTA) have publicly accused the federal government of maintaining massive imports of products including corn, powdered and fresh milk, sugar, meat and other food items from the United States, which they argue undermines production and productivity in the Mexican countryside. In 2024, Mexico imported nearly US$1.07 billion worth of powdered milk from the United States, according to data from the Observatory of Economic Complexity (OEC).

The Mexican Dairy Federation (FEMELECHE) emphasized that milk production must grow between 8% and 10% to reverse this trend — roughly an additional one billion L per year. “This will be possible with an investment of MX$1 billion in the sector to launch a genetic strategy and improve facilities and animal management,” underscored Vicente Gómez, President, FEMELECHE.

Gómez explained that in the short term, efficiency can be improved through better cattle nutrition and enhanced care practices. Subsequently, infrastructure can be upgraded to ensure cows are properly managed, with clean, covered, well-tempered and dry spaces, and with constant access to food and water.

He noted that genetic improvement takes longer. This involves selecting both the mother and father to ensure calves are born with desirable traits, primarily increased milk production — as is already occurring in the United States, where cows are expected to produce up to 60L per day within the next 10 years. Gómez also acknowledged the importance of the Milk for Well-Being Program in supporting small producers, who represent nearly 75% of the sector. He noted that this segment requires direct support, while medium and large producers need access to credit at preferential rates.

Reducing Structural Import Dependence

Since last year, the federal government has promoted various initiatives to strengthen the dairy sector and, in the long term, eliminate imports of this product. According to Leonel Cota, Deputy Minister, SADER, the government has begun purchasing fresh milk from producers in Chihuahua, Jalisco and Michoacán under the Milk for Well-Being Program.

In Jalisco, 800,000L of milk are purchased daily from local producers for approximately MX$9.3 million. In Chihuahua, 600,000L per day are acquired for nearly MX$7 million. Additionally, production plants have been rehabilitated, such as the facility in Campeche, which received an investment of MX$140 million and was inaugurated at the end of 2025. From this plant, supply will be distributed to the states of Campeche, Yucatán, Quintana Roo and Tabasco.

In Michoacan, work continues on adapting the new powdered milk production plant located in the municipality of Jiquilpan. This project involves an investment of more than MX$700 million and will have a production capacity of 250,000L per day, aimed at supporting the most vulnerable families with fortified milk priced at MX$7.50. According to SADER, the new plant will raise national production from 13.5L billion to 15L billion by the end of President Claudia Sheinbaum’s term. Operations are expected to begin in March 2027.

In Baja California Sur, an agreement was reached with a local company to produce 700,000L of fresh milk per month, eliminating the need to transport it from Chihuahua. Cota stated that the objective is to ensure that national milk production is sufficient to meet the country’s entire domestic demand. Additionally, the official highlighted that the Milk for Well-Being Program, formerly known as Liconsa, is expanding its coverage.

In 2025, the Milk for Well-Being Program reached a historic milestone by serving more than 7.2 million beneficiaries through 13,000 distribution points nationwide under the Social Supply Program. The program includes a national registry of more than 3,030 small- and medium-scale producers across 54 collection centers and continues to purchase milk at a guaranteed price of MX$11.50/L.