Mexico’s dairy sector: current outlook and future challenges
Mexico's dairy sector expects a decrease in the price of forages used for animal feed by 2022.
Mexico’s dairy sector expects a decrease in the price of forages used for animal feed by 2022.
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In recent days, dairy farmers in Mexico have mentioned that they expect a decrease in forage prices in the coming year. Small, medium, and large producers expect to benefit from this decrease in the cost of raw materials. On the other hand, cattle farmers expect the price per liter of milk to recover by 2022 to contribute to their economic recovery.
To analyze all these changes at the productive and economic level, it is important to assess an overview of forages in Mexico. In addition, this allows us to give a better context on the current situation of the dairy sector in this Latin American country.
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Overview of forage production in Mexico
According to official figures, in 2020, grain corn was grown in an area of 7’481,137 hectares throughout Mexico. Of this area, 5’438,206 hectares were cultivated. Thus, it was obtained that the production of corn grain in Mexico was 21’885,117 tons during 2020, to obtain a yield of 4,024 tons per hectare.
However, concerning green forage corn, the figures showed that 561,106 hectares were cultivated. Of this area, 16’130,985 tons were produced, for a yield of 28,749 tons per hectare, demonstrating high production and efficiency.
Fodder corn is the most produced type of fodder in Mexico, especially in the state of Jalisco, which has the largest cattle herd in the country.
Fodder oats during 2020 were planted on an area of 663,467 hectares. Of this area, 588,374 hectares were cultivated. It was obtained that the production of fodder oats in Mexico was 8’572,814 tons during 2020, to obtain a yield of 14,570 tons per hectare.
Added to these, forage sorghum figures indicate that during 2020 in Mexico 153,360 hectares were sown of which 127,472 were cultivated. Production from this area was 3’031,350 tons, for yields of 23,780 tons per hectare.
In the case of wheat grain, 562,217 hectares were grown in 2020. Of these, 546,469 hectares were cultivated. In total, the production of wheat grain was 2’949,775 tons in Mexico during 2020. Thus, the yield was 5,398 tons per hectare.
Based on these data, it can be inferred that Mexico supplies wide range of fodder for animal feed. The production of fodder corn, fodder oats, and wheat grain is especially important. These raw materials are very useful for the manufacture of poultry and swine feed. In this way, Mexico can partly supply its demand for fodder.
Importance of forage consumption in milk production
Milk production costs in cows are inherently linked to the diet supplied, which includes forages. Feed efficiency is about achieving high milk production compared to low or stable forage intake. In this way, farms can obtain favorable economic returns since feed constitutes about 70% of the herd’s fixed costs.
First, the quality of the forage supplied must be optimal in terms of health, nutrition, and preparation. A professional in agronomic engineering or animal husbandry can analyze the best type of forage for the herd and the best form of consumption for the cows. Forage is important to maintain rumen health and its microbiota and physicochemical balance.
Secondly, it is important to consider that the animal welfare of cows is strongly related to higher milk production rates. It is currently known that cows that have welfare and sufficient resting areas increase their productive capacity.
Energy used for processes such as moving, milking, and feeding should be reduced as much as possible. Instead, the time and energy available should be directed to resting, as it is when cows ruminate and use most of the forage provided. Thanks to this, milk production increases and the feed conversion rate improves notably.
Thirdly, cow lactation plays a key role. On the one hand, the time of lactation has different energy requirements: in the first months, efficiency is high, while in the last months it decreases. Moreover, the number of lactations of the cow also have an incidence in the final milk costs. Younger cows spend energy on growth, while more mature cows have finished growing and devote their energy to milk production. Thus, milk production costs may be lower in older cows and the later stages of lactation.
Finally, it should be noted that some other factors affect milk production costs. The type of system implemented on the farm (intensive, semi-intensive, extensive), the health status of the region, the breed of cows used, management, disease prevalence, reproductive efficiency, among others.
Mexico’s dairy sector presents proposals
Mexico’s dairy sector is seeking to expand agricultural acreage by 2022 and authorize irrigation of these areas. This decision would increase the production of fodder at the national level and lower the price of these raw materials for animal feed.
Therefore, livestock farmers expect that 35 to 40% of the surface area will be authorized for irrigation; in addition, this is a strategy to face the recent droughts that have affected several regions of Mexico.
Droughts in 2021 have increased the price of raw materials such as fodder for animal feed. It is estimated that the cost of feed for dairy cattle has risen between 35% and 40%. In addition, producers mention that other inputs have also had an increase in their costs.
All of this impacts production costs, which compared to the price of a liter of milk do not satisfy farmers.
On the other hand, Mexico’s dairy sector fears the closure of small, medium, and large companies if the cost of feed does not stabilize. In addition, these companies can be maintained, but they will have to considerably reduce the number of cows on their farms, which will have an impact on national milk production.
For their part, the corresponding Mexican agencies have proposed fixing prices in the dairy sector and its derivatives to balance them with production costs.
Mexico’s dairy sector has important figures
Mexico produced close to 12 billion liters of milk on average during the last decade. In addition, between 2007 and 2014 the average annual growth of milk production was close to 1.0%.
On the other hand, five states in Mexico have historically led milk production at the national level: Jalisco produces 19%; Coahuila 12%; Durango 10%; Chihuahua 9% and, finally, Guanajuato with 7% closes the TOP 5.
In total, these five states contribute around 57% of all milk produced in Mexico.
Finally, it is expected that in 2021 there will be a 2.3% growth in milk production compared to 2020. As a result, total dairy production is expected to reach 16.687 million tons according to recent figures.
This 2021 production has been meeting the expected figures, recovering after the difficulties associated with the COVID-19 pandemic.
The world is currently facing economic difficulties concerning the raw material market and its prices. These costs have a direct impact on livestock production since these products are the main source of feed for dairy cattle.
Mexico’s production of fodder has increased in recent years. Of these, forage corn is one of the main inputs for animal feed and has a high production at the national level. However, the international corn market has shown price increases.
Thus, it is important to highlight the parameters that can benefit livestock farms to reduce production costs and increase feed efficiency. Among these parameters are the type of forage supplied, cow lactation status, animal welfare, and management and reproduction factors.
Finally, given the situation of forage prices in Mexico, dairy sector organizations have launched proposals to mitigate the impact. Five Mexican states provide 57% of all milk nationwide, which in the last decade produced close to 12 billion liters of milk, and they expect to continue to overcome these difficulties.