In a significant move toward dairy self-sufficiency, Mexico has unveiled plans to sharply reduce its imports of milk powder from the United States and invest in building a national milk powder production facility. This policy marks a strategic shift in Mexico’s agri-food agenda, aiming to strengthen food sovereignty, support local dairy farmers, and reduce dependence on foreign suppliers.
The initiative is part of an ambitious government strategy led by the Ministry of Agriculture and Rural Development (SADER), which includes:
Reopening and modernizing domestic dairy plants - including facilities privatized in the 1990s - to restore critical processing infrastructure.
Expanding social programs such as “Milk for Wellbeing,” which now guarantees farmers a premium price of 11.50 pesos per liter while providing affordable milk to consumers, benefiting millions of households and stabilizing demand for raw milk.
Investing MX$83.76 billion ($4.1 billion) between 2025 and 2030 to boost national milk production from 13.3 billion liters to 15 billion liters annually, with the goal of replacing up to 30% of current milk powder imports—worth about 700 million pesos each year.
Supporting small and medium-sized producers through subsidies, technical assistance, and infrastructure upgrades, given that 97% of Mexican dairy producers are smallholders.
This policy shift comes amid heightened global trade tensions and follows the announcement of a new 30% U.S. tariff on Mexican and EU goods. While the U.S. remains Mexico’s largest supplier of dairy products, this move is expected to reshape North American dairy trade and create opportunities for alternative suppliers, such as India, the world’s largest milk producer.
Challenges remain, including the need for substantial investment, advanced processing technology, and consistent access to high-quality raw milk. Mexican producers currently face cost disadvantages compared to U.S. suppliers, who benefit from economies of scale and grain-oriented production systems.
Beyond economics, the initiative carries geopolitical implications. By reducing reliance on U.S. dairy imports, Mexico signals a desire to diversify its trade relationships and build resilience against unpredictable external policies. The success of this strategy will depend on the government’s ability to mobilize resources, foster collaboration across the supply chain, and maintain momentum toward its 2030 self-sufficiency targets.
Opportunity for India?
As the leading milk producing nation and having touched 240 billion lt (240 million tons) per annum, India accounts for more than 24% of world’s production. Five major dairy exporters - Argentina, Australia, European Union, New Zealand and the United States produced 288.9 million tons of cow milk in 2024. In 3 to 5 years, India would be producing milk equal to these 5 major exporting countries.
On export probability, dairy expert Vipan Kakkar says, “In a normal year, Indian dairy industry produces approximately 6 lakh tons of Skim milk powder (SMP). It then self-consumes about 3.5 lakh ton in the lean season for recombination and utilizes another 1.5 lakh ton for usage in other food applications leaving about approx. 1 lakh ton as a rolling stock. In 2-3 years with attractive raw milk prices, increased cattle herd, better feeding, shorter lean period etc., we ended up with surplus stocks of over 3 lakh tons SMP.”
He said, “I feel dairy exports from India on SMP & Butter can be stated “opportunistic” at the very best. Silverline in the clouds for us was that we did fantastic exports of butter/milk fat last year (55,000 tons in 2024 calendar year) with competitive prices compared to international levels thus easing the burden on the dairy processing plants by liquidating stocks, reducing much-needed working capital apart from earning foreign currency for the nation.”