Required Report - public distribution

**Date:** 20/10/2004

**GAIN Report Number:** MX4121

MX4121

**Mexico**

Dairy and Products

**Annual Report**

2004

**Approved by:**

![](media/image1.wmf)Suzanne E. Heinen

#### U.S. Embassy Mexico City

**Prepared by:**

Sal Trejo/David Williams

**Report Highlights:**

Fluid milk production continues to increase at a modest rate and is
forecast at 10.2 MMT in CY 2005. Mexico imports large volumes of milk
powder to augment its domestic production. However, Leche
Industrializada CONASUPO (LICONSA) the parastatal company charged with
distributing milk to the poor continues to increase its usage of
domestically produced fluid milk, at the expense of additional imports
of powdered milk. Consequently, imports of non-fat dry milk and whole
milk powder are forecast unchanged in CY 2005 at 170,000 MT and 45,000
MT respectively. Imports of U.S. milk powder are subject to a
tariff-rate quota that increases three percent annually. The tariff-rate
quota will be eliminated on January 1, 2008, in accordance with the
terms of the North American Free Trade Agreement. The GOM continues to
ban imports of live cattle following the December 2004 detection of
Bovine Spongiform Encephalopathy (BSE) in a single cow in Washington
State. Imports of other dairy products are not affected by the ban.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Mexico \[MX1\]

\[MX\]

Table of Contents

[**SECTION I. SITUATION AND OUTLOOK
3**](#section-i.-situation-and-outlook)

[SECTION II. STATISTICAL TABLES 4](#section-ii.-statistical-tables)

[PS&D Dairy, Milk, Fluid 4](#psd-dairy-milk-fluid)

[PS&D Dairy, Cheese 5](#psd-dairy-cheese)

[PS&D Dairy, Butter 6](#psd-dairy-butter)

[PS&D Dairy, Milk, Nonfat Dry 7](#psd-dairy-milk-nonfat-dry)

[PS&D Dairy, Dry Whole Milk Powder 8](#psd-dairy-dry-whole-milk-powder)

[PRODUCTION OF FLUID MILK BY STATE
9](#production-of-fluid-milk-by-state)

[MEXICO'S MONTHLY FLUID MILK PRODUCTION
10](#mexicos-monthly-fluid-milk-production)

[AVERAGE MILK PRICES PAID TO PRODUCERS IN MEXICO PER STATE
11](#average-milk-prices-paid-to-producers-in-mexico-per-state)

[AVERAGE MILK PRICES PAID TO PRODUCERS IN MEXICO PER MONTH
12](#average-milk-prices-paid-to-producers-in-mexico-per-month)

[MEXICO'S DAIRY PRODUCT IMPORTS 13](#mexicos-dairy-product-imports)

[SECTION III. NARRATIVE ON SUPPLY AND DEMAND, POLICY & MARKETING
20](#section-iii.-narrative-on-supply-and-demand-policy-marketing)

[FLUID MILK 20](#fluid-milk)

[Production 20](#production)

[Consumption 20](#consumption)

[Trade 20](#trade)

[Policy 21](#policy)

[Marketing 21](#marketing)

[CHEESE 21](#cheese)

[Production 21](#production-1)

[Consumption 21](#consumption-1)

[Trade 21](#trade-1)

[Policy 22](#policy-1)

[Marketing 22](#marketing-1)

[BUTTER 22](#butter)

[Production 22](#production-2)

[Consumption 22](#consumption-2)

[Stocks 22](#stocks)

[Trade 22](#trade-2)

[Policy 22](#policy-2)

[Marketing 22](#marketing-2)

[NON-FAT DRY MILK (NFDM) 22](#non-fat-dry-milk-nfdm)

[Production 22](#production-3)

[Consumption 23](#consumption-3)

[Stocks 23](#stocks-1)

[Trade 23](#trade-3)

[Policy 23](#policy-3)

[Marketing 23](#marketing-3)

[WHOLE MILK POWDER (WMP) 23](#whole-milk-powder-wmp)

[Production 23](#production-4)

[Consumption 23](#consumption-4)

[Stocks 24](#stocks-2)

[Trade 24](#trade-4)

[Policy 24](#policy-4)

[Marketing 24](#marketing-4)

[POLICY 24](#policy-5)

[MARKETING 24](#marketing-5)

[Related FAS/Mexico Reports 25](#related-fasmexico-reports)

# SECTION I. SITUATION AND OUTLOOK

## ­

**Dairy Situation and Outlook**: Mexico's fluid milk production
continues to grow modestly and is expected to increase to almost 10.2
MMT in CY 2005. Production estimates for 2003 and 2004 are somewhat
lower than previously estimated as farmers switched to cheaper and lower
quality feeds due to the high cost of imported feed materials. Leche
Industrializada CONASUPO (LICONSA) the parastatal company charged with
distributing milk to the poor continues to increase its usage of
domestically produced fluid milk, thus dampening additional imports of
NFDM. Imports of non-fat dry milk powder (NFDM) are forecast at 170,000
MT in CY 2005, unchanged from 2004. While cheese production is forecast
to grow modestly in 2005, LICONSA's emphasis on sourcing more fluid milk
domestically is expected to lead to lower than expected domestic cheese
production in 2004, as well as larger imports of fluid milk in areas
along the border with the United States. Imports of cheese continue to
grow as middle and higher income consumers develop tastes for foreign
cheeses and foods. Cheese imports are expected to reach 85,000 MT in
2005.

Due to the GOM's current ban on imports of live cattle following the
detection of a single case of BSE in Washington State late last year,
Mexico has not imported dairy cattle from the United States since
December 24, 2003. Imports of other dairy products such as powdered
milk, fluid milk, semen, and embryos are not affected by the ban.

Note: Currently, the Mexican peso is valued at US\$11.37.

# SECTION II. STATISTICAL TABLES

## 

## PS&D Dairy, Milk, Fluid

(1000 Metric Tons)

+--------------------+-------+------+-------+------+-------+-------+
| PSD Table          |       |      |       |      |       |       |
+--------------------+-------+------+-------+------+-------+-------+
| Country:           | M     |      |       |      |       |       |
|                    | exico |      |       |      |       |       |
+--------------------+-------+------+-------+------+-------+-------+
| Commodity:         | D     |      |       |      |       |       |
|                    | airy, |      |       |      |       |       |
|                    | Milk, |      |       |      |       |       |
|                    | Fluid |      |       |      |       |       |
+--------------------+-------+------+-------+------+-------+-------+
|                    | 2003  |      | 2004  |      | 2005  |       |
+--------------------+-------+------+-------+------+-------+-------+
|                    | Old   | New  | Old   | New  | Old   | New   |
+--------------------+-------+------+-------+------+-------+-------+
| Calendar Year      | 01    |      | 01    |      | 01    |       |
| Begin              | /2003 |      | /2004 |      | /2005 |       |
+--------------------+-------+------+-------+------+-------+-------+
| Cows In Milk       | 6800  | 6800 | 6850  | 6850 |       | 6850  |
+--------------------+-------+------+-------+------+-------+-------+
| Cows Milk          | 9870  | 9784 | 10140 | 9900 |       | 10020 |
| Production         |       |      |       |      |       |       |
+--------------------+-------+------+-------+------+-------+-------+
| Other Milk         | 140   | 140  | 140   | 140  |       | 140   |
| Production         |       |      |       |      |       |       |
+--------------------+-------+------+-------+------+-------+-------+
| TOTAL Production   | 10010 | 9924 | 10280 | 1    |       | 10160 |
|                    |       |      |       | 0040 |       |       |
+--------------------+-------+------+-------+------+-------+-------+
| Intra EC Imports   | 0     | 0    | 0     | 0    |       | 0     |
+--------------------+-------+------+-------+------+-------+-------+
| Other Imports      | 20    | 58   | 20    | 55   |       | 50    |
+--------------------+-------+------+-------+------+-------+-------+
| TOTAL Imports      | 20    | 58   | 20    | 55   |       | 50    |
+--------------------+-------+------+-------+------+-------+-------+
| TOTAL SUPPLY       | 10030 | 9982 | 10300 | 1    |       | 10210 |
|                    |       |      |       | 0095 |       |       |
+--------------------+-------+------+-------+------+-------+-------+
| Intra EC Exports   | 0     | 0    | 0     | 0    |       | 0     |
+--------------------+-------+------+-------+------+-------+-------+
| Other Exports      | 0     | 0    | 0     | 0    |       | 0     |
+--------------------+-------+------+-------+------+-------+-------+
| TOTAL Exports      | 0     | 0    | 0     | 0    |       | 0     |
+--------------------+-------+------+-------+------+-------+-------+
| Fluid Use Dom.     | 4380  | [    | 4550  | 4345 | []{.  | 4400  |
| Consum.            |       | ]{.m |       |      | mark} |       |
|                    |       | ark} |       |      |       |       |
|                    |       |      |       |      |       |       |
|                    |       | 4352 |       |      |       |       |
+--------------------+-------+------+-------+------+-------+-------+
| Factory Use        | 5650  | [    | 5750  | 5750 | []{.  | 5810  |
| Consum.            |       | ]{.m |       |      | mark} |       |
|                    |       | ark} |       |      |       |       |
|                    |       |      |       |      |       |       |
|                    |       | 5630 |       |      |       |       |
+--------------------+-------+------+-------+------+-------+-------+
| Feed Use Dom.      | 0     | 0    | 0     | 0    |       | 0     |
| Consum.            |       |      |       |      |       |       |
+--------------------+-------+------+-------+------+-------+-------+
| TOTAL Dom.         | 10030 | 9982 | 10300 | 1    |       | 10210 |
| Consumption        |       |      |       | 0095 |       |       |
+--------------------+-------+------+-------+------+-------+-------+
| TOTAL DISTRIBUTION | 10030 | 9982 | 10300 | 1    |       | 10210 |
|                    |       |      |       | 0095 |       |       |
+--------------------+-------+------+-------+------+-------+-------+

## PS&D Dairy, Cheese

(1000 Metric Tons)

+--------------------+-------+-------+-------+------+-------+-------+
| PSD Table          |       |       |       |      |       |       |
+--------------------+-------+-------+-------+------+-------+-------+
| Country:           | M     |       |       |      |       |       |
|                    | exico |       |       |      |       |       |
+--------------------+-------+-------+-------+------+-------+-------+
| Commodity:         | D     |       |       |      |       |       |
|                    | airy, |       |       |      |       |       |
|                    | C     |       |       |      |       |       |
|                    | heese |       |       |      |       |       |
+--------------------+-------+-------+-------+------+-------+-------+
|                    | 2003  |       | 2004  |      | 2005  |       |
+--------------------+-------+-------+-------+------+-------+-------+
|                    | Old   | New   | Old   | New  | Old   | New   |
+--------------------+-------+-------+-------+------+-------+-------+
| Calendar Year      | 01    |       | 01    |      | 01    |       |
| Begin              | /2003 |       | /2004 |      | /2005 |       |
+--------------------+-------+-------+-------+------+-------+-------+
| Beginning Stocks   | 0     | 0     | 0     | 0    |       |       |
+--------------------+-------+-------+-------+------+-------+-------+
| Production         | 145   | 126   | 150   | 130  |       | 132   |
+--------------------+-------+-------+-------+------+-------+-------+
| Intra EC Imports   | 0     | 0     | 0     | 0    |       | 0     |
+--------------------+-------+-------+-------+------+-------+-------+
| Other Imports      | 73    | 78    | 75    | 80   |       | 85    |
+--------------------+-------+-------+-------+------+-------+-------+
| TOTAL Imports      | 73    | 78    | 75    | 80   |       | 85    |
+--------------------+-------+-------+-------+------+-------+-------+
| TOTAL SUPPLY       | 218   | 204   | 225   | 210  |       | 217   |
+--------------------+-------+-------+-------+------+-------+-------+
| []{.mark}          | 0     | 0     | 0     | 0    |       | 0     |
|                    |       |       |       |      |       |       |
| Intra EC Exports   |       |       |       |      |       |       |
+--------------------+-------+-------+-------+------+-------+-------+
| Other Exports      | 0     | 0     | 0     | 0    |       | 0     |
+--------------------+-------+-------+-------+------+-------+-------+
| TOTAL Exports      | 0     | 0     | 0     | 0    |       | 0     |
+--------------------+-------+-------+-------+------+-------+-------+
| Human Dom.         | 218   | 204   | 225   | 210  |       | 217   |
| Consumption        |       |       |       |      |       |       |
+--------------------+-------+-------+-------+------+-------+-------+
| Other Use, Losses  | 0     | 0     | 0     | 0    |       | 0     |
+--------------------+-------+-------+-------+------+-------+-------+
| Total Dom.         | 218   | 204   | 225   | 210  |       | 217   |
| Consumption        |       |       |       |      |       |       |
+--------------------+-------+-------+-------+------+-------+-------+
| TOTAL Use          | 218   | 204   | 225   | 210  |       | 217   |
+--------------------+-------+-------+-------+------+-------+-------+
| Ending Stocks      | 0     | 0     | 0     | 0    |       | 0     |
+--------------------+-------+-------+-------+------+-------+-------+
| TOTAL DISTRIBUTION | 218   | 204   | 225   | 210  |       | 217   |
+--------------------+-------+-------+-------+------+-------+-------+

## 

## 

## 

## 

## PS&D Dairy, Butter

(1000 Metric Tons)

  --------------------- --------- ------- --------- -------- --------- --------
  PSD Table                                                            

  Country:              Mexico                                         

  Commodity:            Dairy,                                         
                        Butter                                         

                        2003              2004               2005      

                        Old       New     Old       New      Old       New

  Calendar Year Begin   01/2003           01/2004            01/2005   

  Beginning Stocks      0         0       0         0                  0

  Production            78        74      80        80                 80

  Intra EC Imports      0         0       0         0                  0

  Other Imports         40        40      40        40                 40

  TOTAL Imports         40        40      40        40                 40

  TOTAL SUPPLY          118       114     120       120                120

  Intra EC Exports      0         0       0         0                  0

  Other Exports         0         0       0         0                  0

  TOTAL Exports         0         0       0         0                  0

  Domestic Consumption  118       114     120       120                120

  TOTAL Use             118       114     120       120                120

  Ending Stocks         0         0       0         0                  0

  TOTAL DISTRIBUTION    118       114     120       120                120
  --------------------- --------- ------- --------- -------- --------- --------

Note: Above data includes butter and butterfat.

## 

## PS&D Dairy, Milk, Nonfat Dry

(1000 Metric Tons)

  --------------------- --------- ------- --------- ------- --------- --------
  PSD Table                                                           

  Country:              Mexico                                        

  Commodity:            Dairy,                                        
                        Milk,                                         
                        Nonfat                                        
                        Dry                                           

                        2003              2004              2005      

                        Old       New     Old       New     Old       New

  Calendar Year Begin   01/2003           01/2004           01/2005   

  Beginning Stocks      37        37      27        25                25

  Production            150       150     160       160               160

  Intra EC Imports      0         0       0         0                 0

  Other Imports         165       173     165       170               170

  TOTAL Imports         165       173     165       170               170

  TOTAL SUPPLY          352       360     352       355               355

  Intra EC Exports      0         0       0         0                 0

  Other Exports         0         0       0         0                 0

  TOTAL Exports         0         0       0         0                 0

  Human Dom.            325       335     325       330               330
  Consumption                                                         

  Other Use, Losses     0         0       0         0                 0

  Total Dom.            325       335     325       330               330
  Consumption                                                         

  TOTAL Use             325       335     325       330               330

  Ending Stocks         27        25      27        25                25

  TOTAL DISTRIBUTION    352       360     352       355               355
  --------------------- --------- ------- --------- ------- --------- --------

NOTE: Mexico does not keep official statistics on production and
consumption of powdered milk. Post estimates for milk powder production
(nonfat and whole milk) are based on interviews with the trade and
LICONSA. Above production figures include both WMP and NFDM as
production figures for WMP and NFDM are not separated or registered
separately.

## 

## 

## 

## 

## 

## 

## PS&D Dairy, Dry Whole Milk Powder

(1000 Metric Tons)

  --------------------- --------- -------- --------- ------- --------- --------
  PSD Table                                                            

  Country:              Mexico                                         

  Commodity:            Dairy,                                         
                        Dry Whole                                      
                        Milk                                           
                        Powder                                         

                        2003               2004              2005      

                        Old       New      Old       New     Old       New

  Calendar Year Begin   01/2003            01/2004           01/2005   

  Beginning Stocks      0         0        0         0                 0

  Production            0         0        0         0                 0

  Intra EC Imports      0         0        0         0                 0

  Other Imports         45        43       45        45                45

  TOTAL Imports         45        43       45        45                45

  TOTAL SUPPLY          45        43       45        45                45

  Intra EC Exports      0         0        0         0                 0

  Other Exports         0         0        0         0                 0

  TOTAL Exports         0         0        0         0                 0

  Human Dom. Consum.    45        43       45        45                45

  Other Use, Losses     0         0        0         0                 0

  Total Dom.            45        43       45        45                45
  Consumption                                                          

  TOTAL Use             45        43       45        45                45

  Ending Stocks         0         0        0         0                 0

  TOTAL DISTRIBUTION    45        43       45        45                45
  --------------------- --------- -------- --------- ------- --------- --------

## PRODUCTION OF FLUID MILK BY STATE 

(000 LITERS)

  ------------------------------ ------------- -------------- ------------
  STATES                         2003          2004\*         \% Change

  AGUASCALIENTES                 394,987       400,000        1.2

  BAJA CALIFORNIA                200,861       214,355        6.7

  BAJA CALIFORNIA SUR            39,651        41,084         3.6

  CAMPECHE                       25,884        24,060         (7.5)

  COAHUILA                       1,058,886     1,082,802      2.2

  COLIMA                         37,847        34,388         (10.0)

  CHIAPAS                        320,923       320,624        (0.09)

  CHIHUAHUA                      712,828       780,000        9.4

  MEXICO CITY                    12,955        13,340         2.9

  DURANGO                        953,316       940,835        (1.3)

  GUANAJUATO                     647,465       648,675        0.1

  GUERRERO                       78,215        84,427         7.9

  HIDALGO                        415,024       429,187        3.4

  JALISCO                        1,712,546     1,722,500      0.5

  MEXICO                         489,628       489,144        0

  MICHOACAN                      313,040       307,500        (1.8)

  MORELOS                        17,500        17,910         2.3

  NAYARIT                        64,175        66,201         2.9

  NUEVO LEON                     40,790        40,685         1.0

  OAXACA                         142,901       143,494        0

  PUEBLA                         363,296       365,500        0.6

  QUERETARO                      215,823       216,014        0.08

  QUINTANA ROO                   4,974         3,743          (32.8)

  SAN LUIS POTOSI                142,848       152,455        6.7

  SINALOA                        82,365        81,483         0.5

  SONORA                         148,090       133,915        (10.5)

  TABASCO                        96,041        99,300         3.3

  TAMAULIPAS                     27,887        31,632         13.4

  TLAXCALA                       150,000       147,054        (2.6)

  VERACRUZ                       720,426       719,217        (0.1)

  YUCATAN                        9,253         7,640          (21.1)

  ZACATECAS                      135,930       141,012        3.7

  TOTAL                          9,784,355     9,900,177      1.1
  ------------------------------ ------------- -------------- ------------

SOURCE: Agriculture Secretariat (SAGARPA)

\*SAGARPA's forecast figures for January to December 2004

## MEXICO'S MONTHLY FLUID MILK PRODUCTION

(000 LITERS)

  -------------------------- ---------------- --------------- ------------
  MONTH                      2003             2004\*          \% Change

  JANUARY                    746,121          755,099         1.2

  FEBRUARY                   740,716          736,599         (0.5)

  MARCH                      760,352          759,571         (0.8)

  APRIL                      775,415          767,779         (0.1)

  MAY                        805,947          785,107         (2.6)

  JUNE                       840,211          853,335         1.5

  JULY                       892,882          898,457         0.6

  AUGUST                     916,742          931,246         0.2

  SEPTEMBER                  902,354          927,696         9.7

  OCTOBER                    822,902          877,596         6.6

  NOVEMBER                   796,461          811,226         1.8

  DECEMBER                   784,253          796,466         1.5

  TOTAL                      9,784,355        9,900,177       1.1
  -------------------------- ---------------- --------------- ------------

SOURCE: Agriculture Secretariat (SAGARPA)

\*SAGARPA's forecast figures for January to December 2004

## AVERAGE MILK PRICES PAID TO PRODUCERS IN MEXICO PER STATE

(PESOS PER LT.)

  ------------------------------- --------- --------- --------- ---------
  STATES                          2000      2001      2002      2003

  AGUASCALIENTES                  2.94      2.89      2.91      2.93

  BAJA CALIFORNIA                 3.85      3.79      3.81      3.78

  BAJA CALIFORNIA SUR             4.12      5.09      3.81      3.95

  CAMPECHE                        3.65      3.93      3.68      3.27

  COAHUILA                        3.06      3.07      3.27      3.40

  COLIMA                          3.68      5.32      3.56      4.08

  CHIAPAS                         2.96      2.67      2.61      2.81

  CHIHUAHUA                       3.08      3.08      3.21      3.25

  MEXICO CITY                     4.06      4.53      3.56      5.00

  DURANGO                         3.08      4.21      3.75      3.68

  GUANAJUATO                      2.93      2.69      2.75      2.88

  GUERRERO                        4.03      4.65      4.40      4.86

  HIDALGO                         2.82      3.14      3.24      3.25

  JALISCO                         3.05      2.98      2.95      2.67

  MEXICO                          3.64      3.26      3.15      3.20

  MICHOACAN                       3.35      3.14      3.14      3.36

  MORELOS                         4.16      4.72      4.62      4.55

  NAYARIT                         4.04      4.33      3.98      3.35

  NUEVO LEON                      2.89      3.51      3.04      3.44

  OAXACA                          4.38      4.66      4.37      4.66

  PUEBLA                          3.37      2.86      3.07      3.22

  QUERETARO                       3.29      3.48      3.63      3.47

  QUINTANA ROO                    2.94      3.35      3.40      3.69

  SAN LUIS POTOSI                 3.56      2.96      3.11      3.09

  SINALOA                         2.85      3.07      3.23      3.26

  SONORA                          3.62      3.71      3.72      3.79

  TABASCO                         3.43      3.58      2.94      2.94

  TAMAULIPAS                      3.95      4.31      4.21      3.94

  TLAXCALA                        3.89      3.30      2.99      3.23

  VERACRUZ                        2.93      2.42      2.33      3.24

  YUCATAN                         4.04      4.45      3.69      4.07

  ZACATECAS                       3.87      3.77      3.19      3.48
  ------------------------------- --------- --------- --------- ---------

Source: Agriculture Secretariat (SAGARPA)

## AVERAGE MILK PRICES PAID TO PRODUCERS IN MEXICO PER MONTH

(PESOS PER LT.)

  ------------------------------- ------------- ------------- ------------
  MONTH                           2003          2004          VAR. %

  January                         3.14          3.37          7.3

  February                        3.14          3.38          7.6

  March                           3.18          3.36          5.6

  April                           3.18          3.50          10.0

  May                             3.18          3.50          10.0

  June                            3.20          3.55          10.9

  July                            3.20          3.55          10.9

  August                          3.23          3.60          11.4

  September                       3.25          N/A           N/A

  October                         3.23          N/A           N/A

  November                        3.32          N/A           N/A

  December                        3.37          N/A           N/A
  ------------------------------- ------------- ------------- ------------

SOURCE: Agriculture Secretariat (SAGARPA)

## MEXICO'S DAIRY PRODUCT IMPORTS

+---------------+------------+------------+------------+------------+
| ***Tariff     | **2003**   |            | **2004\*** |            |
| Number***     |            |            |            |            |
|               |            |            |            |            |
| ***Commodity  |            |            |            |            |
| & Country of  |            |            |            |            |
| Origin***     |            |            |            |            |
+---------------+------------+------------+------------+------------+
|               | **Value**  | **Volume** | **Value**  | **Volume** |
+---------------+------------+------------+------------+------------+
| 0401.10.01    |            |            |            |            |
|               |            |            |            |            |
| Milk & cream  |            |            |            |            |
| not exceeding |            |            |            |            |
| 1% fat in     |            |            |            |            |
| hermetically  |            |            |            |            |
| sealed        |            |            |            |            |
| containers    |            |            |            |            |
| (Lts.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 1,506,469  | 2,824,160  | 840,592    | 1,779,128  |
+---------------+------------+------------+------------+------------+
| Others        | 48,989     | 75,246     | 1,469      | 3,000      |
+---------------+------------+------------+------------+------------+
| Total         | 1,554,458  | 2,899,406  | 842,061    | 1,782,128  |
+---------------+------------+------------+------------+------------+
| 0401.10.99    |            |            |            |            |
|               |            |            |            |            |
| Other milk    |            |            |            |            |
| and cream not |            |            |            |            |
|               |            |            |            |            |
| Exceeding 1%  |            |            |            |            |
| (Lts.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 0          | 0          | 0          | 0          |
+---------------+------------+------------+------------+------------+
| Others        | 30,141     | 14,895     | 0          | 0          |
+---------------+------------+------------+------------+------------+
| Total         | 30,141     | 14,895     | 0          | 0          |
+---------------+------------+------------+------------+------------+
| 0401.20.01    |            |            |            |            |
|               |            |            |            |            |
| Milk & cream  |            |            |            |            |
| from 1 to 6%  |            |            |            |            |
| Fat in        |            |            |            |            |
| hermetically  |            |            |            |            |
| sealed        |            |            |            |            |
| Containers    |            |            |            |            |
| (Lts.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 7,634,062  | 13,945,853 | 4,599,576  | 7,504,480  |
+---------------+------------+------------+------------+------------+
| Others        | 13,774,618 | 32,066,400 | 1,213,801  | 2,797,200  |
+---------------+------------+------------+------------+------------+
| Total         | 21,408,680 | 46,012,253 | 5,813,377  | 10,301,680 |
+---------------+------------+------------+------------+------------+
| 0401.20.99    |            |            |            |            |
|               |            |            |            |            |
| Other milk &  |            |            |            |            |
| cream between |            |            |            |            |
| 1 and 6% fat  |            |            |            |            |
| (Lts.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 3,274,969  | 8,820,202  | 1,249,532  | 4,226,626  |
+---------------+------------+------------+------------+------------+
| Others        | 0          | 0          | 0          | 0          |
+---------------+------------+------------+------------+------------+
| Total         | 3,274,969  | 8,820,202  | 1,249,532  | 4,226,626  |
+---------------+------------+------------+------------+------------+
| 0401.30.01    |            |            |            |            |
|               |            |            |            |            |
| Milk & cream  |            |            |            |            |
| exceeding 6%  |            |            |            |            |
| fat in        |            |            |            |            |
| hermetically  |            |            |            |            |
| sealed        |            |            |            |            |
| containers    |            |            |            |            |
|               |            |            |            |            |
| (Lts.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 5,916,859  | 10,167,710 | 1,502,745  | 2,159,078  |
+---------------+------------+------------+------------+------------+
| Others        | 648,747    | 468,373    | 642,478    | 475,688    |
+---------------+------------+------------+------------+------------+
| Total         | 6,565,606  | 10,636,083 | 2,145,223  | 2,634,766  |
+---------------+------------+------------+------------+------------+
| ***Tariff     | **2003**   |            | **2004\*** |            |
| Number***     |            |            |            |            |
|               |            |            |            |            |
| ***Commodity  |            |            |            |            |
| & Country of  |            |            |            |            |
| Origin***     |            |            |            |            |
+---------------+------------+------------+------------+------------+
|               | **Value**  | **Volume** | **Value**  | **Volume** |
+---------------+------------+------------+------------+------------+
| 0401.30.99    |            |            |            |            |
|               |            |            |            |            |
| Other milk    |            |            |            |            |
| and cream     |            |            |            |            |
| exceeding     |            |            |            |            |
| 6%/lts.       |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 13,326,742 | 9,022,730  | 2,590,271  | 1,023,703  |
+---------------+------------+------------+------------+------------+
| Others        | 451,308    | 371,799    | 311,300    | 243,784    |
+---------------+------------+------------+------------+------------+
| Total         | 13,778,050 | 9,394,529  | 2,901,571  | 1,267,487  |
+---------------+------------+------------+------------+------------+
| 0402.10.01    |            |            |            |            |
|               |            |            |            |            |
| Milk powder   |            |            |            |            |
| not exceeding |            |            |            |            |
| 1.5% fat      |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 1          | 66,460,466 | 94,659,586 | 49,854,152 |
|               | 14,949,985 |            |            |            |
+---------------+------------+------------+------------+------------+
| Others        | 89,360,955 | 55,617,286 | 53,922,094 | 29,048,059 |
+---------------+------------+------------+------------+------------+
| Total         | 2          | 1          | 1          | 78,902,211 |
|               | 04,310,940 | 22,077,752 | 48,581,680 |            |
+---------------+------------+------------+------------+------------+
| 0402.10.99    |            |            |            |            |
|               |            |            |            |            |
| Other milk    |            |            |            |            |
| powder not    |            |            |            |            |
| exceeding     |            |            |            |            |
| 1.5% fat      |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 450,047    | 186,350    | 1,196,370  | 494,525    |
+---------------+------------+------------+------------+------------+
| Others        | 16,575,082 | 7,003,328  | 11,204,244 | 4,284,155  |
+---------------+------------+------------+------------+------------+
| Total         | 17,025,129 | 7,189,678  | 12,400,614 | 4,778,680  |
+---------------+------------+------------+------------+------------+
| 0402.21.01    |            |            |            |            |
|               |            |            |            |            |
| Milk powder   |            |            |            |            |
| exceeding     |            |            |            |            |
| 1.5% fat      |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 231,696    | 134,725    | 0          | 0          |
+---------------+------------+------------+------------+------------+
| Others        | 76,152,059 | 41,793,784 | 50,817,150 | 27,629,352 |
+---------------+------------+------------+------------+------------+
| Total         | 76,384,129 | 41,928,509 | 50,817,150 | 27,629,352 |
+---------------+------------+------------+------------+------------+
| 0402.21.99    |            |            |            |            |
|               |            |            |            |            |
| Other milk    |            |            |            |            |
| powder        |            |            |            |            |
| exceeding     |            |            |            |            |
| 1.5% fat      |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 189,998    | 53,183     | 173,140    | 32,267     |
+---------------+------------+------------+------------+------------+
| Others        | 4,364,863  | 1,659,500  | 2,049,479  | 690,720    |
+---------------+------------+------------+------------+------------+
| Total         | 4,554,861  | 1,712,683  | 2,222,619  | 725,987    |
+---------------+------------+------------+------------+------------+
| 0402.29.99    |            |            |            |            |
|               |            |            |            |            |
| Other milk    |            |            |            |            |
| powder (Kgs.) |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 613,219    | 154,807    | 361,918    | 91,398     |
+---------------+------------+------------+------------+------------+
| Others        | 0          | 0          | 0          | 0          |
+---------------+------------+------------+------------+------------+
| Total         | 613,219    | 154,807    | 361,918    | 91,398     |
+---------------+------------+------------+------------+------------+
| ***Tariff     | **2003**   |            | **2004\*** |            |
| Number***     |            |            |            |            |
|               |            |            |            |            |
| ***Commodity  |            |            |            |            |
| & Country of  |            |            |            |            |
| Origin***     |            |            |            |            |
+---------------+------------+------------+------------+------------+
|               | **Value**  | **Volume** | **Value**  | **Volume** |
+---------------+------------+------------+------------+------------+
|               |            |            |            |            |
+---------------+------------+------------+------------+------------+
| 0402.91.01    |            |            |            |            |
|               |            |            |            |            |
| Evaporated    |            |            |            |            |
| milk (Kgs.)   |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 1,667,529  | 1,383,973  | 959,244    | 770,438    |
+---------------+------------+------------+------------+------------+
| Others        | 4,011      | 3,012      | 10,256     | 1,550      |
+---------------+------------+------------+------------+------------+
| Total         | 1,671,540  | 1,386,985  | 969,500    | 771,988    |
+---------------+------------+------------+------------+------------+
| 0402.91.99    |            |            |            |            |
|               |            |            |            |            |
| Other         |            |            |            |            |
| evaporated    |            |            |            |            |
| milk (Kgs.)   |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 8,252      | 3,945      | 10,568     | 3,120      |
+---------------+------------+------------+------------+------------+
| Others        | 1,892      | 200        | 121,576    | 179,088    |
+---------------+------------+------------+------------+------------+
| Total         | 10,149     | 4,145      | 132,144    | 182,208    |
+---------------+------------+------------+------------+------------+
| 0402.99.01    |            |            |            |            |
|               |            |            |            |            |
| Other         |            |            |            |            |
| evaporated    |            |            |            |            |
| milk (kgs.)   |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 1,684,200  | 1,405,676  | 2,794,894  | 3,737,977  |
+---------------+------------+------------+------------+------------+
| Others        | 18,580,960 | 16,726,358 | 17,824,429 | 15,564,420 |
+---------------+------------+------------+------------+------------+
| Total         | 20,265,160 | 18,132,034 | 20,619,323 | 19,302,397 |
+---------------+------------+------------+------------+------------+
| 0402.99.99    |            |            |            |            |
|               |            |            |            |            |
| Other         |            |            |            |            |
| condensed     |            |            |            |            |
| milk (Kgs.)   |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 507,791    | 232,987    | 1,162,186  | 801,544    |
+---------------+------------+------------+------------+------------+
| Others        | 236,310    | 337,077    | 210,167    | 275,996    |
+---------------+------------+------------+------------+------------+
| Total         | 744,101    | 570,064    | 1,372,353  | 1,077,540  |
+---------------+------------+------------+------------+------------+
| 0406.10.01    |            |            |            |            |
|               |            |            |            |            |
| Fresh Cheese  |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 13,804,796 | 5,458,383  | 10,647,408 | 3,753,560  |
+---------------+------------+------------+------------+------------+
| Others        | 89,549     | 11,317     | 26,809     | 2,236      |
+---------------+------------+------------+------------+------------+
| Total         | 13,894,345 | 5,469,700  | 10,674,217 | 3,755,796  |
+---------------+------------+------------+------------+------------+
| 0406.20.01    |            |            |            |            |
|               |            |            |            |            |
| Powdered      |            |            |            |            |
| grated cheese |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 28,492,260 | 8,518,995  | 19,793,805 | 5,372,808  |
+---------------+------------+------------+------------+------------+
| Others        | 1,299,524  | 431,942    | 22,367     | 4,192      |
+---------------+------------+------------+------------+------------+
| Total         | 29,791,784 | 8,950,937  | 19,816,172 | 5,377,000  |
+---------------+------------+------------+------------+------------+
| ***Tariff     | **2003**   |            | **2004\*** |            |
| Number***     |            |            |            |            |
|               |            |            |            |            |
| ***Commodity  |            |            |            |            |
| & Country of  |            |            |            |            |
| Origin***     |            |            |            |            |
+---------------+------------+------------+------------+------------+
|               | **Value**  | **Volume** | **Value**  | **Volume** |
+---------------+------------+------------+------------+------------+
|               |            |            |            |            |
+---------------+------------+------------+------------+------------+
| 0406.30.01    |            |            |            |            |
|               |            |            |            |            |
| Processed     |            |            |            |            |
| cheese (Kgs.) |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 46,446     | 30,612     | 21,194     | 7,816      |
+---------------+------------+------------+------------+------------+
| Others        | 9,045      | 3,335      | 7,171      | 2,064      |
+---------------+------------+------------+------------+------------+
| Total         | 55,491     | 33,947     | 28,365     | 9,880      |
+---------------+------------+------------+------------+------------+
| 0406.30.99    |            |            |            |            |
|               |            |            |            |            |
| Other         |            |            |            |            |
| processed     |            |            |            |            |
| cheese (Kgs.) |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 773,086    | 165,166    | 702,337    | 146,632    |
+---------------+------------+------------+------------+------------+
| Others        | 1,872,128  | 545,518    | 1,399,629  | 366,726    |
+---------------+------------+------------+------------+------------+
| Total         | 2,645,214  | 710,684    | 2,101,966  | 513,358    |
+---------------+------------+------------+------------+------------+
| 0406.40.01    |            |            |            |            |
|               |            |            |            |            |
| Blue cheese   |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 232,679    | 36,806     | 107,027    | 15,321     |
+---------------+------------+------------+------------+------------+
| Others        | 1,201,561  | 265,916    | 637,954    | 118,129    |
+---------------+------------+------------+------------+------------+
| Total         | 1,434,240  | 302,722    | 744,981    | 133,450    |
+---------------+------------+------------+------------+------------+
| 0406.90.01    |            |            |            |            |
|               |            |            |            |            |
| Sardo cheese  |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 0          | 0          | 0          | 0          |
+---------------+------------+------------+------------+------------+
| Others        | 0          | 0          | 0          | 0          |
+---------------+------------+------------+------------+------------+
| Total         | 0          | 0          | 0          | 0          |
+---------------+------------+------------+------------+------------+
| 0406.90.02    |            |            |            |            |
|               |            |            |            |            |
| Reggiano      |            |            |            |            |
| cheese (Kgs.) |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 0          | 10         | 0          | 0          |
+---------------+------------+------------+------------+------------+
| Others        | 2,200,293  | 619,737    | 803,007    | 212,969    |
+---------------+------------+------------+------------+------------+
| Total         | 2,200,293  | 619,737    | 803,007    | 212,969    |
+---------------+------------+------------+------------+------------+
| 0406.90.03    |            |            |            |            |
|               |            |            |            |            |
| Colonia       |            |            |            |            |
| cheese (Kgs.) |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 56,646     | 12,447     | 49,775     | 9,178      |
+---------------+------------+------------+------------+------------+
| Others        | 1,392,502  | 643,727    | 479,021    | 189,000    |
+---------------+------------+------------+------------+------------+
| Total         | 1,449,148  | 656,174    | 528,796    | 198,178    |
+---------------+------------+------------+------------+------------+
| ***Tariff     | **2003**   |            | **2004\*** |            |
| Number***     |            |            |            |            |
|               |            |            |            |            |
| ***Commodity  |            |            |            |            |
| & Country of  |            |            |            |            |
| Origin***     |            |            |            |            |
+---------------+------------+------------+------------+------------+
|               | **Value**  | **Volume** | **Value**  | **Volume** |
+---------------+------------+------------+------------+------------+
|               |            |            |            |            |
+---------------+------------+------------+------------+------------+
| 0406.90.04    |            |            |            |            |
|               |            |            |            |            |
| Various hard  |            |            |            |            |
| & semi‑hard   |            |            |            |            |
|               |            |            |            |            |
| Cheese (Kgs.) |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 557,717    | 113,105    | 464,182    | 81,481     |
+---------------+------------+------------+------------+------------+
| Others        | 94,364,508 | 46,592,473 | 63,860,661 | 25,420,514 |
+---------------+------------+------------+------------+------------+
| Total         | 94,922,225 | 46,705,578 | 64,324,843 | 25,501,995 |
+---------------+------------+------------+------------+------------+
| 0406.90.06    |            |            |            |            |
|               |            |            |            |            |
| Egmont,       |            |            |            |            |
| maximum       |            |            |            |            |
| moisture 40%, |            |            |            |            |
| fat 45%       |            |            |            |            |
| minimum,      |            |            |            |            |
|               |            |            |            |            |
| salt 3.9%     |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 0          | 0          | 0          | 0          |
+---------------+------------+------------+------------+------------+
| Others        | 2,432,629  | 1,198,640  | 1,940,421  | 875,168    |
+---------------+------------+------------+------------+------------+
| Total         | 2,432,629  | 1,198,640  | 1,940,421  | 875,168    |
+---------------+------------+------------+------------+------------+
| 0406.90.99    |            |            |            |            |
|               |            |            |            |            |
| Other cheeses |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 31,749,930 | 10,069,120 | 16,827,239 | 4,474,329  |
+---------------+------------+------------+------------+------------+
| Others        | 9,099,158  | 2,908,639  | 10,522,698 | 3,183,929  |
+---------------+------------+------------+------------+------------+
| Total         | 40,849,088 | 12,977,759 | 27,349,937 | 7,658,258  |
+---------------+------------+------------+------------+------------+
| 0405.10.01    |            |            |            |            |
|               |            |            |            |            |
| Butter in     |            |            |            |            |
| packages less |            |            |            |            |
| than 1 kg.    |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 343,282    | 88,432     | 378,289    | 67,959     |
+---------------+------------+------------+------------+------------+
| Others        | 1,779,103  | 775,513    | 1,850,216  | 700,877    |
+---------------+------------+------------+------------+------------+
| Total         | 2,122,385  | 863,945    | 2,228,505  | 768,836    |
+---------------+------------+------------+------------+------------+
| 0405.10.99    |            |            |            |            |
|               |            |            |            |            |
| Other butter  |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 527,996    | 183,894    | 444,027    | 124,320    |
+---------------+------------+------------+------------+------------+
| Others        | 1,151,152  | 786,920    | 3,073,855  | 1,757,043  |
+---------------+------------+------------+------------+------------+
| Total         | 1,679,148  | 970,814    | 3,517,882  | 1,881,363  |
+---------------+------------+------------+------------+------------+
| 0405.20.01    |            |            |            |            |
|               |            |            |            |            |
| Dairy Spreads |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 5,778      | 1,652      | 4,352      | 981        |
+---------------+------------+------------+------------+------------+
| Others        | 0          | 0          | 0          | 0          |
+---------------+------------+------------+------------+------------+
| Total         | 5,778      | 1,652      | 4,352      | 981        |
+---------------+------------+------------+------------+------------+
| ***Tariff     | **2003**   |            | **2004\*** |            |
| Number***     |            |            |            |            |
|               |            |            |            |            |
| ***Commodity  |            |            |            |            |
| & Country of  |            |            |            |            |
| Origin***     |            |            |            |            |
+---------------+------------+------------+------------+------------+
|               | **Value**  | **Volume** | **Value**  | **Volume** |
+---------------+------------+------------+------------+------------+
|               |            |            |            |            |
+---------------+------------+------------+------------+------------+
| 0405.90.01    |            |            |            |            |
|               |            |            |            |            |
| Butter Fat,   |            |            |            |            |
| Dehydrated    |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 9,953,716  | 6,120,202  | 1,426,017  | 793,064    |
+---------------+------------+------------+------------+------------+
| Others        | 67,303,570 | 42,243,805 | 76,649,096 | 38,604,924 |
+---------------+------------+------------+------------+------------+
| Total         | 77,257,286 | 48,364,007 | 78,075,113 | 39,397,988 |
+---------------+------------+------------+------------+------------+
| 0405.90.99    |            |            |            |            |
|               |            |            |            |            |
| Butter fat,   |            |            |            |            |
| dehydrated    |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 6,824      | 1,928      | 53,974     | 12,747     |
+---------------+------------+------------+------------+------------+
| Others        | 73,154     | 44,195     | 104,395    | 56,700     |
+---------------+------------+------------+------------+------------+
| Total         | 79,978     | 46,123     | 158,369    | 69,447     |
+---------------+------------+------------+------------+------------+
| 0403.10.01    |            |            |            |            |
|               |            |            |            |            |
| Yoghurt       |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 1,626,898  | 1,113,349  | 860,996    | 617,596    |
+---------------+------------+------------+------------+------------+
| Others        | 682,563    | 225,004    | 40,106     | 5,963      |
+---------------+------------+------------+------------+------------+
| Total         | 2,309,461  | 1,338,353  | 901,102    | 623,559    |
+---------------+------------+------------+------------+------------+
| 0403.90.99    |            |            |            |            |
|               |            |            |            |            |
| Other milk    |            |            |            |            |
| whey (Kgs.)   |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 4,769,898  | 2,970,478  | 1,942,959  | 958,870    |
+---------------+------------+------------+------------+------------+
| Others        | 13,782,065 | 9,187,159  | 9,153,622  | 4,891,835  |
+---------------+------------+------------+------------+------------+
| Total         | 18,551,728 | 12,157,637 | 11,096,581 | 5,850,705  |
+---------------+------------+------------+------------+------------+
| 0404.10.01    |            |            |            |            |
|               |            |            |            |            |
| Whey,         |            |            |            |            |
| sweetened or  |            |            |            |            |
| not, nor      |            |            |            |            |
|               |            |            |            |            |
| concentrated  |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 20,137,532 | 39,854,414 | 13,707,243 | 22,645,473 |
+---------------+------------+------------+------------+------------+
| Others        | 5,289,990  | 2,793,810  | 5,455,953  | 2,326,020  |
+---------------+------------+------------+------------+------------+
| Total         | 25,427,522 | 42,648,224 | 19,163,196 | 24,971,493 |
+---------------+------------+------------+------------+------------+
| 0404.10.99    |            |            |            |            |
|               |            |            |            |            |
| Whey, others  |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 9,139,014  | 8,978,537  | 6,155,658  | 5,758,969  |
+---------------+------------+------------+------------+------------+
| Others        | 221,242    | 66,777     | 446,089    | 360,405    |
+---------------+------------+------------+------------+------------+
| Total         | 9,360,256  | 9,045,314  | 6,601,747  | 6,119,374  |
+---------------+------------+------------+------------+------------+
| 0404.90.99    |            |            |            |            |
|               |            |            |            |            |
| Other wheys   |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 2,260,745  | 539,083    | 1,244,643  | 212,182    |
+---------------+------------+------------+------------+------------+
| Others        | 967,077    | 376,801    | 890,904    | 258,695    |
+---------------+------------+------------+------------+------------+
| Total         | 3,227,822  | 915,884    | 2,135,547  | 470,877    |
+---------------+------------+------------+------------+------------+
| ***Tariff     | **2003**   |            | **2004\*** |            |
| Number***     |            |            |            |            |
|               |            |            |            |            |
| ***Commodity  |            |            |            |            |
| & Country of  |            |            |            |            |
| Origin***     |            |            |            |            |
+---------------+------------+------------+------------+------------+
|               | **Value**  | **Volume** | **Value**  | **Volume** |
+---------------+------------+------------+------------+------------+
|               |            |            |            |            |
+---------------+------------+------------+------------+------------+
| 2105.00.01    |            |            |            |            |
|               |            |            |            |            |
| Ice cream and |            |            |            |            |
| similar       |            |            |            |            |
| products      |            |            |            |            |
|               |            |            |            |            |
| (Kgs.)        |            |            |            |            |
+---------------+------------+------------+------------+------------+
| U.S.          | 25,776,901 | 16,399,419 | 18,755,998 | 10,686,421 |
+---------------+------------+------------+------------+------------+
| Others        | 3,044,579  | 1,332,113  | 1,770,823  | 875,076    |
+---------------+------------+------------+------------+------------+
| Total         | 28,821,480 | 17,731,532 | 20,526,821 | 11,561,497 |
+---------------+------------+------------+------------+------------+

SOURCE: Bank of Mexico and Commerce Secretariat (SECOFI)

\*Data is for Jan-July 2004

NOTE: Value is in U.S. dollars and volume is in liters or kilograms as
indicated following each product description.

# SECTION III. NARRATIVE ON SUPPLY AND DEMAND, POLICY & MARKETING

# 

# FLUID MILK

## 

## Production

Fluid milk production in Mexico continues to grow steadily and is
forecast at 10.2 MMT in CY 2005. Continued improvements in herd
management among Mexico's larger dairies, consistent demand from
processors, expanded demand from LICONSA to meet the needs of government
social programs, and expected steady prices should all lead to higher
production in 2005. Despite increasing modernization among larger
dairies, a number of factors continue to plague milk production among
medium and smaller producers such as poor sanitation and genetics,
inadequate cold storage and refrigeration facilities, a lack of
affordable financing, and poor infrastructure in more remote areas.
Lower production estimates for 2003 and 2004 reflect changes in feeding
patterns as farmers shifted to lower cost and poorer quality feeds to
offset the higher cost of imported feeds. The fluid milk production
estimate for CY 2003 reflects official data.

## Consumption

Mexico's fluid milk consumption for CY 2005 is forecast at 4.4 MMT, as
LICONSA expands its use of domestic fluid milk to augment its use of
reconstituted milk powder in its social programs and reduce its
dependence on imported milk powder. It's estimated that LICONSA
distributes almost 3.3 million liters of subsidized milk per day at the
current price of 3.50 pesos per liter (US\$0.30) to the economically
challenged part of the population who depend on the government social
program for low-priced milk. For CY 2004 and 2005, LICONSA expects to
increase utilization of domestic fluid milk at the expense of imported
milk powder. In CY 2003, LICONSA is estimated to have used 190 million
liters of domestically produced raw fluid milk, 84 percent more than in
CY 2002.

Despite the expanded distribution of fluid milk by LICONSA, overall
fluid milk consumption for CY 2004 is revised downward due in large part
to lower than expected production and higher milk prices. Consumer
prices in Mexico are currently 7.26 pesos per liter for pasteurized milk
(US\$0.62) and 8.07 per liter of UHT milk (US\$0.69). More widespread
consumption of fluid milk continues to be hampered by problems with
sanitation, transportation, and processing capacity, although supplies
and quality are improving. Total consumption in CY 2003 reflects
official data.

## 

The Government of Mexico estimates that about 28 percent of milk is
consumed raw in Mexico and 24 percent is consumed via the government's
social program managed by LICONSA. The first case represents a potential
health problem, and the second case a heavy monetary burden that
discourages investments for improvements in genetics by domestic milk
producers who receive lower prices for their raw milk. LICONSA serves as
the buyer of last resort for many smaller and more remote producers who
are not members of cooperatives or part of the supply area for milk
processors. While LICONSA pays producers a price similar to a market
price, discounts are applied for poor quality and producers are under
weekly or monthly supply contracts. The consumption of pasteurized milk
and dairy products represents an estimated 48 percent of total
consumption.

## Trade

CY 2003 fluid milk imports jumped to levels not seen since the
mid-1990's and are expected to continue at relatively high levels in
2004 and 2005 as retailers along the border source larger volumes of
fluid milk from the United States to compensate for domestic supplies
that are being bid away by processors in the interior of Mexico. This
increase in imports appears to stem from LICONSA's increased purchasing
of fluid milk, which has caused processors to seek new sources of
supply. Imports of fluid milk continue to be hampered in the
Mexicali/Tijuana area where according to trade sources, the local milk
producers have made it difficult to sell U.S. milk through the local
supermarkets and specialty stores with the help of obscure local
government regulations that require local stores to sell all locally
produced milk first.

Mexico had begun to diversify its sources of dairy cattle in recent
years, reducing its imports of U.S. cattle and importing more cattle
from lower cost origins such as New Zealand, Australia, and Canada. Thus
far in 2004, Mexico has imported 6,090 head of cattle, all from New
Zealand. However, given the current ban on imports of live cattle from
Canada and the United States, Mexico is also expected to increase its
imports of semen in 2004 and the United States is expected to be a major
supplier. Mexico imported 1,066,478 units of U.S. semen in CY 2003.

## 

## Policy

In the late 1990's, the government took steps to reduce its role in the
purchasing and distribution of milk. Currently, there no support
programs to directly aid dairy producers.

## 

## Marketing

See dairy products marketing section at the end of this report.

# 

# 

# CHEESE 

## 

## Production

Cheese production for CY 2005 is forecast to only slightly increase from
the previous year's revised estimate due to sluggish growth in fluid
milk production and the continued usage of fluid milk in the GOM's
social programs. Low cheese production for CY 2004 and CY 2003 reflects
the reduction in fluid milk production and the increased consumption of
fluid milk by LICONSA in their social program. CY 2003 cheese output
reflects official data.

## 

## Consumption 

Cheese consumption for CY 2005 is forecast to increase over the previous
year's revised estimate as a result of increasing demand from the
fast-food industry, institutional users, and specialty cheese consumers.
However, lower production of domestic cheeses in 2003 and 2004 stemming
from increased purchases by LICONSA and subsequent reduced commercial
supplies of fluid milk has reduced cheese consumption in some market
segments, chiefly among low-income consumers.

## 

## Trade

Cheese imports are forecast to be higher in CY 2005 as consumers
continue to develop preferences for non-Mexican cheeses such as
mozzarella, cheddar, monterrey jack, provolone and brie. For CY 2004,
imports are projected slightly higher due to demand for non-Mexican
cheeses. CY 2003 imports reflect official data.

## 

## Policy

See dairy products policy section at the end of this report.

## 

## Marketing

See dairy products marketing section at the end of this report.

# 

# BUTTER 

## 

## Production

All Mexican statistics on butter and butterfat production are combined.
Butter and butterfat production for CY 2005 are forecast to remain
unchanged from the previous year's estimate as LICONSA remains the
principal user of butterfat used in reconstituting milk powder into
whole milk for its social program. Additionally, consumers are becoming
more health conscious and are purchasing more low-fat dairy products and
substitutes such as margarine that do not contain cholesterol. The CY
2003 butter production estimate reflects official data.

## 

## Consumption

Combined butter and butterfat consumption for CY 2005 is forecast to
remain unchanged from the previous year's estimate due to consumer
trends towards lower fat and lower cholesterol foods. The estimate for
CY 2003 reflects official data.

## 

## Stocks

Consistent with past years, no stocks are estimated due to the lack of
refrigerated storage space among producers and end users. Users such as
bakeries, food processors, and LICONSA do not keep large stocks of
butter.

## 

## Trade

Imports for CY 2005, are forecast to remain unchanged as demand for
imported butter is expected to remain largely unchanged in light of
trends toward lower fat dairy products and other foods. The estimate for
CY 2003 reflects official data. Note: PS+D trade data reflect
consumption imports of butter, while the butter trade data presented in
this report in tabular form represents total imports.

## 

## Policy

See dairy products policy section at the end of this report.

## 

## Marketing

See dairy products marketing section at the end of this report.

# 

# NON-FAT DRY MILK (NFDM)

## 

## Production

The Government of Mexico combines NFDM and whole milk powder in its
production and consumption estimates. Consequently, the NFDM PS+D
contains estimates that reflect both NFDM and WMP production and
consumption. Mexican NFDM producers are not expected to significantly
increase production in the short term due to limited processing
facilities. Output for CY 2005 is forecast to remain unchanged from the
previous year's estimate, however, it is slightly greater than the CY
2003 estimate given expectations that LICONSA will seek to maintain a
minimal level of stocks to avoid making emergency purchases of milk
powder on the international market. The 2003 estimate reflects official
data.

## 

## Consumption

The consumption forecast for CY 2005 remains largely unchanged from the
previous estimates given expectations that LICONSA will increase its
purchases of fluid milk rather than import additional quantities of NFDM
to meet its program needs. Demand from cheese and other food processors
is expected to remain steady. The 2003 estimate reflects official data.

## 

## Stocks

Stocks for CY 2005 are forecast to remain unchanged from the previous
year's revised estimate as LICONSA continues its policy of minimizing
storage costs. LICONSA is the main holder of powered milk stocks. In
previous years, LICONSA had tried to maintain larger stock levels to
avoid imports during the early part of the calendar year when domestic
milk prices are typically highest. Stocks held by the private sector are
minimal.

## 

## Trade

Mexico continues to be far from reaching self‑sufficiency in NFDM
production because of limited domestic processing capacity and limited
supplies of domestically produced milk. The import forecast for NFDM in
CY 2005 remains unchanged from the previous year's estimate reflecting
the expectation that LICONSA will continue to procure greater volumes of
domestic milk. Demand from the processing sector is also expected to
remain steady as many small processors prefer to buy NFDM from the
larger importers who can negotiate a better price, due to volume
purchases, however, depending on the price, processors can use either
fluid milk or milk powder in their processes. Imports of powdered milk
will be subject to tariff-rate quotas until January 1, 2008, see policy
section. For CY 2003, the NFDM import estimate reflects official data.

## 

## Policy

See dairy products policy section at the end of this report.

## 

## Marketing

See dairy products marketing section at the end of this report.

# 

# WHOLE MILK POWDER (WMP)

## 

## Production

Because Mexico does not make a distinction between NFDM and WMP
statistics, the PS+D for WMP only reflects imports. While production
figures are not included in the PS+D, based on industry discussions,
production of WMP is expected to be largely unchanged in 2005.

## Consumption

WMP consumption for CY 2005 is forecast to remain unchanged from 2004.
According to LICONSA, over 60 percent of the WMP and NFDM is consumed by
the poor. LICONSA expects to continue opening new milk stores in
proportion to population growth, as long as the government budget
permits.

## 

## Stocks

Stocks of WMP are minimal and are not reflected in the PS&D table for
WMP.

## 

## Trade

Mexico continues to be far from reaching self‑sufficiency in WMP
production because of limited domestic processing capacity. Imports are
forecast unchanged in CY 2005 given LICONSA's emphasis on purchasing
domestic fluid milk. The CY 2003 estimate reflects official data.

## 

## Policy

See dairy products policy section at the end of this report.

## 

## Marketing

See dairy products marketing section at the end of this report.

# 

# POLICY 

With the exception of powdered milk, all U.S. exports of dairy products
to Mexico are duty-free. Milk powder exports (NFDM and WMP) to Mexico
are subject to a tariff-rate quota (TRQ), which will be phased out in
2008. At the beginning of NAFTA there was a duty-free quota of 41,200 MT
for NFDM with an over-quota tariff rate of 127.8 percent or \$1,067/MT,
whichever was greater. For the 2004, the tariff-rate quota is 53,757 MT
and the tariff was down to the greater of 46.9 percent or \$391.8/MT; by
January 1, 2008, the tariffs on U.S. milk powder exports to Mexico are
scheduled to be eliminated. Private companies bid for import permits
(cupos) that allow them to import a specific quantity under the TRQ at
zero duty. LICONSA is not subject to the TRQ and may import any quantity
of milk powder at zero duty to meet its program needs.

Milk and milk products along with embryos and semen are exempt from the
BSE ban. However, Mexico continues to ban imports of live dairy cattle.
See MX 4106 for additional details.

# 

# MARKETING

The cooperator group that represents the US dairy industry in foreign
markets is the US Dairy Export Council (USDEC). The council's staff in
Mexico City provides information on all aspects of US dairy product
trade and use, including market intelligence on trade policy issues,
organizing informational seminars for the Mexican trade, and developing
promotion and sales opportunities for US dairy products in the Mexican
market. USDEC also organizes buying missions for potential Mexican
importers/distributors to visit US dairy processing plants so they can
meet and see, firsthand, various US suppliers and the services they
offer.

Mexico is expected to continue as a significant importer of dairy
products to augment domestic production. While imports are likely to
consist primarily of bulk products such as NFDM, higher value products
such as specialty cheeses and ice creams are also likely to find a home
in Mexico's growing consumer class as tastes, preferences, and shopping
habits increasingly mirror those of the United States and Europe.

US Dairy Export Council (USDEC)

Matanzas 733-C, Col. Lindavista

07300 Mexico, .D.F

Tel 011-52-55-5119-0475

Fax 011-52-55-1997-5758

[http://www.usdec.org](http://www.usdec.org/)

The following table lists all reports regarding developments in dairy
policy and the dairy industry in Mexico since the beginning CY 2004.

# Related FAS/Mexico Reports 

  ----------------- ---------------------------------------- -------------
  Report Number     Title of Report                          Date

  MX4004            Dry Milk WTO Quota                       1/12/04

  MX4005            Dry Milk NAFTA Quota                     1/12/04

  MX4006            BSE Update                               1/09/04

  MX4015            BSE Update Second Edition                1/29/04

  MX4031            Auctions for Dairy Preparations          3/05/04

  MX4032            Milk Powder Auction                      3/05/04

  MX4036            BSE Update Third Edition                 3/11/04

  MX4040            BSE Update Fourth Edition                3/24/04

  MX4052            BSE Update Fifth Edition                 4/21/04

  MX4053            Mexico to Overhaul Import Requirement    4/23/04
                    Procedures for Animals and Animal        
                    Products                                 

  MX4056            BSE Update Sixth Edition                 5/03/04

  MX4062            Dairy and Products Semi Annual Report    5/14/04

  MX4067            BSE Update Seventh Edition               5/26/04

  MX4085            BSE Update Eighth Edition                7/08/04

  MX4106            BSE Update (Ninth Edition)               8/24/04
  ----------------- ---------------------------------------- -------------

#