U.S. dairy farmers praise the power of collaboration in Mexico

Trade agreements, as critical as they are, do not in themselves create trade.

Trade happens when people connect with people, a reality five Dairy Management Inc. board members, all dairy farmers, witnessed on an October 20-25 governance mission to Mexico, organized by the U.S. Dairy Export Council.

Simply put, one-to-one business connections matter. They always have. They always will.

"That was my biggest takeaway, my aha moment, realizing how valuable the relationships are," said Marilyn Hershey, a Pennsylvania dairy farmer who chairs the DMI board that oversees USDEC, a nonprofit subsidiary.

"It's not something that's accomplished in one year. It's something that happens over the years through developing relationships and increasing collaboration. That's when the payoff comes, when you see that collaboration."

Other DMI board members seeing what nearly 25 years of USDEC work in Mexico has accomplished had the same takeaway.

"Relationships are vital," said Larry Hancock, a Texas dairy farmer with 4,200 cows who was recently elected USDEC's new chairman. "The thing I want to really get across to the DMI and USDEC boards after this trip is how important relationships are and how well USDEC facilitates those relationships. It was a really cool and amazing for me to see."

USDEC sells no products. Its mission is to see U.S. dairy exporting companies do the exporting, benefiting farmers and the entire industry. In 2018,  sales to Mexico reached $1.4 billion, about one-fourth of all U.S. dairy exports around the world.

Because value is dependent on world prices, which go up and down, volume may be a more reliable indicator of year-after-year progress. The chart below shows the results of sustained effort -- a 450% increase in 25 years.

Consistent export volume growth means more and more U.S. milk has crossed the border to Mexico through dairy products and ingredients. 

Two-way relationship

Twenty-five years ago, the North American Free Trade Agreement (NAFTA)  opened a door of opportunity for tariff-free trade with Mexico. Processors and farmers alike were united in the belief that an organization was needed to facilitate U.S. dairy exports not just to Mexico, but the world.

DMI founded USDEC 24 years ago. Through the dairy checkoff, farmers continue to fund USDEC, accounting for about three-fourths of USDEC's budget. 

Missions to Mexico and other U.S. dairy markets give DMI board members an opportunity to assess with their own eyes and ears USDEC programs and activities, the ROI for farmers and the potential for continued growth.

"This is a two-way relationship," said Evan Hillan, who milks 350 cows and farms 1,400 acres in Ladysmith, Wis. "We're not just exporting our products to them. We are also importing their knowledge to us. What they have done in the fluid market and the yogurt market has just been tremendous. You see it walking down the aisles of supermarkets like Walmart and H-E-B. It's an eye-opening experience."

Kathleen Skiba, who runs a 180-cow dairy in North Branch, Minn., was equally impressed by the dairy products on display in Mexico. Skiba shared her insight into the post below on Facebook. 

Economic impact 

"The Impact of NAFTA on U.S. Dairy Exports to Mexico" by Informa Economics is a 35-page analysis commissioned by the U.S. Dairy Export Council and the National Milk Producers Federation in 2017.

One of the most striking findings of the Informa study is this: Every $1 of U.S. dairy exports to Mexico generates $2.50 of economic activity in the United States.

Put another way, the U.S. dairy industry's investment in Mexico has yielded more than "double the bang for the buck" in the U.S. economy, with benefits spread out not just to farmers, but the broader U.S. economy.

"The biggest aha moment for me was seeing how the U.S. and Mexican dairy industries need each other," said Chace Fullmer, who runs a 2,500-cow dairy in Sigurd, Utah.

Dairy industries unite on common causes

Over the years, the dairy industries of the U.S. and Mexico have found ways to cement their common interests with partnerships.

In 2016, USDEC and the National Milk Producers Federation created the U.S.-Mexico Dairy Alliance with ANGLAC, the Confederación Nacional de Organizaciones Ganaderas (CNOG), and Cámara Nacional de Industriales de la Leche (CANILEC).

On Oct. 21, dairy leaders from both countries met in Torreón, Mexico. They issued a statement agreeing to work collaboratively on 12 issues that will benefit the dairy sectors of both countries. It was the fourth annual meeting between U.S. and Mexican dairy leaders.

2019 programs and activities in Mexico

Among other efforts so far this year, USDEC has:

• Represented U.S. Dairy in the United States-Mexico-Canada trade agreement. Funded by membership dues, not checkoff resources, USDEC trade policy staff played a critical role in providing technical input to U.S. negotiators about U.S. Dairy's needs in USMCA. That input is critical because USMCA will replace NAFTA if and when approved by the U.S. Congress and the legislative bodies of Canada and Mexico.  
• Fought for common cheese names. The Consortium for Common Food Names, founded by USDEC, battled the EU’s campaign to monopolize common cheese names through geographical indications (GIs). 
• Helped keep the border open. USDEC addressed a threat to close the U.S. border with Mexico over immigration through swift and far-reaching communication efforts. 
• Worked to eliminate tariffs. USDEC stressed the need to remove Section 232 tariffs on Mexico that triggered retaliatory tariffs on U.S. cheese. The U.S. lifted its tariffs and Mexico eliminated its retaliatory tariffs on cheese.
• Promoted dairy ingredients. USDEC launched two ingredient seminars aimed at increasing dairy utilization by the Mexican food processing industry. 
• Formed new retail partnerships. USDEC launched partnerships with two major Mexican retailers this year: Costco Mexico and Chedraui.
• Explored new opportunities. USDEC held two seminars for Mexican feed manufacturers to highlight the benefits of using permeate and lactose in swine feeding programs.
• Put more boots on the ground. Edgar Garcia is USDEC's new business development manager in Mexico to bolster in-country representation and get closer to buyers and consumers.

Mexico remains número uno

The U.S. dairy industry has seen exports grow in other parts of the world, particularly Asia, but the mission showed DMI board members that USDEC does not take its No. 1 market for granted.

It’s about maintaining and building relationships.

"You can't just come in to a different country, slap down a trade agreement and expect people to buy your product," said Hershey. "There has to be this back and forth. There has to be respect by both parties and I really feel like we are making headway with that."

Mark O'Keefe is vice president of editorial services at the U.S. Dairy Export Council.