U.S. Dairy Exports to Mexico Near $2 Billion Annually, Driving 42% Growth Over 10 Years
Despite steady increases in milk production since 2011, Mexico’s domestic output has not kept pace with its rapidly growing demand. Per capita dairy consumption in the country has surged by 50 pounds since 2011, creating a significant gap that the U.S. has been instrumental in filling. Currently, U.S. dairy exports meet over 80% of Mexico’s annual dairy deficit, estimated at 25-30%.
Long-Term Growth Potential
According to a new report by CoBank’s Knowledge Exchange, the U.S. dairy industry is well-positioned for sustained growth in Mexico and beyond. “Dairy product sales to Mexico have the potential for continued growth as more consumers enter the middle class and seek higher-quality proteins and fats,” said Corey Geiger, lead dairy economist at CoBank.
Broader market opportunities are also emerging as global competitors face production constraints. The European Union and New Zealand, leaders in global dairy exports, are encountering obstacles such as greenhouse gas reduction policies and land limitations. These factors have stalled milk production in these regions, creating opportunities for U.S. dairy to expand its market share.
Investments Driving Export Growth
To meet growing demand, U.S. dairy producers and processors have committed $8 billion to new processing facilities, expected to come online by mid-2025. These investments will add capacity for nearly 20 million pounds of milk per day, enabling increased production of cheese, whey, and other dairy proteins destined for export markets.
This marks a significant shift for the U.S. dairy industry. While historically most American dairy products were consumed domestically, today, one in six tanker trucks of milk leaving U.S. farms is processed into products sold internationally.
Impact of Trade Agreements
Free trade agreements have played a pivotal role in driving export growth. Before the implementation of the North American Free Trade Agreement (NAFTA) in 1994, U.S. dairy exports to Mexico totaled just $211 million. By 2011, Mexico became the first $1 billion export market for U.S. dairy, and under the United States-Mexico-Canada Agreement (USMCA), exports exceeded $2 billion in 2022.
In 2023, U.S. dairy exports to Mexico reached 1.38 billion pounds, with a 10-year growth rate of 42%, according to USDA data.
Future Prospects
“With growing demand in Mexico and additional processing capacity in the U.S., the industry is optimistic about Mexico’s potential to absorb a significant portion of America’s milk production in the form of high-quality dairy products and ingredients,” Geiger said.
