Milk powder with fat content of ≤1.5% market in MERCOSUR

Earlier Report Observations

In 2018, the approval of the MERCOSUR Technical Regulation on the identity and quality of milk powder harmonized standards with international norms, facilitating exports from the region. This contributed to a sharp rise in exports in 2019, which, coupled with lower imports, reduced the internal market size to 46 714 t. The following year, increased external demand from Algeria and China sustained high export levels, while import pressure from Argentina and Uruguay into Brazil – driven by price differentials and the MERCOSUR common external tariff – affected trade flows. However, an 11% production growth to 72 173 t helped the market recover to 64 766 t.

MERCOSUR's competitive advantage in international milk powder prices continued through 2021, supporting local producer profitability and pushing production to 77 230 t, which alongside stable imports expanded the market to 69 602 t. In 2022, Brazilian authorities increased tax pressure on dairy imports from MERCOSUR via the 'Mais Leite Saudável' program to shield domestic output, while greater competition from other global producers influenced trade. Despite a modest production increase to 78 998 t, a surge in exports to 55 975 t shrank the domestic market to 48 687 t.

A drop in international milk powder prices on the Global Dairy Trade platform in 2023 made imports from Argentina and Uruguay more attractive for Brazil, lifting imports to 39 115 t. This, together with a fall in production to 45 741 t as local producer margins eroded, drove the market size up to 58 480 t. An anti-dumping investigation against MERCOSUR imports added regulatory uncertainty. For 2024, the signed EU-MERCOSUR trade agreement opened zero-tariff export quotas, while a Brazilian decree raised the tax burden on imported powder and new minimum remaining shelf-life requirements altered rules for importers.

Production milk powder with fat content of ≤1.5% in MERCOSUR

In kind, 2017-2020, t

Top producers of milk powder with fat content of ≤1.5%, 2017-2020

World map of production of milk powder with fat content of ≤1.5%, 2017-2020

Milk powder with a fat content of ≤1.5% production in MERCOSUR increased for the second consecutive year. In 2020, 72 173 tonnes were produced, marking a significant rise of 11.0% compared to the previous year. Between 2017 and 2020, production grew by 6.9%, which translates to an annualized rate of 2.2%. The lowest production level was recorded in 2018 at 61 243 tonnes, with the largest decline of 9.3% occurring that year.

Annual dynamics of production in MERCOSUR in kind, 2017-2020, t

Exports milk powder with fat content of ≤1.5% from MERCOSUR

Exports in kind, t

The market showed an unstable trend throughout the period. MERCOSUR exported 34 409 tonnes of milk powder with a fat content of ≤1.5% in 2020, down by 23.1% from the previous year. The minimum export volume was recorded in 2018 at 20 439 tonnes, while the maximum was in 2019 at 44 753 tonnes, resulting in a 2.2-fold difference between these years. The largest decline occurred in 2018 with a drop of 44.4%, and the largest increase was in 2019 with a surge of 119.0%.

Annual dynamics of product's exports from MERCOSUR in kind, 2017-2020, t

From 2017 to 2020, exports of milk powder with a fat content of ≤1.5% from MERCOSUR were distributed across many countries. Algeria accounted for 13.4% of exports, Russia for 7.0%, and China for 6.3%, with these three countries together making up only 26.7% of total export flows.

Structure of product's exports in kind by countries, 2017-2020

World map of product's exports from MERCOSUR in kind, 2017-2020

Exports in value, M $ US

Milk powder with a fat content of ≤1.5% deliveries from MERCOSUR increased for the second consecutive year. In 2020, MERCOSUR exported 110.3 million US dollars worth of this product, representing a small increase of 2.8% compared to 2019. Between 2017 and 2020, exports grew by 26.2%, equating to an annualized rate of 8.1%. The minimum value was recorded in 2018 at 80.2 million US dollars, with the largest decline of 8.3% that year. The largest increase occurred in 2019 with a rise of 33.8%.

Annual dynamics of product's exports from MERCOSUR in value, 2017-2020, M $ US

From 2017 to 2020, the partner landscape for exports in value terms was diverse. Algeria accounted for 13.2% of exports, Russia for 6.5%, and China for 5.9%, with these three countries together forming only 25.6% of total flows. A substantial 74.4% was supplied to many other countries.

Structure of product's exports in value by countries, 2017-2020

World map of product's exports from MERCOSUR in value, 2017-2020

Imports milk powder with fat content of ≤1.5% to MERCOSUR

Imports in kind, t

After a two-year decrease, milk powder with a fat content of ≤1.5% shipments to MERCOSUR from abroad increased. In 2020, imports reached 27 002 tonnes, up by 2.2% compared to the previous year. Between 2017 and 2020, imports decreased by 27.5%, which translates to an annualized rate of 10.2%. The minimum import volume was recorded in 2019 at 26 432 tonnes, with the largest decline of 20.3% occurring that year.

Annual dynamics of product's imports to MERCOSUR in kind, 2017-2020, t

During 2017–2020, imports in kind of milk powder with a fat content of ≤1.5% to MERCOSUR were spread relatively evenly. The United States accounted for 5.3% of imports, Chile for 3.0%, and Finland for 1.3%, with these three countries jointly accounting for only 9.6% of total flows.

Structure of product's imports in kind by countries, 2017-2020

World map of product's imports to MERCOSUR in kind, 2017-2020

Imports in value, M $ US

After a two-year contraction, cross-border shipments of milk powder with a fat content of ≤1.5% to MERCOSUR increased. In 2020, imports were recorded at 74.2 million US dollars, marking a strong gain of 15.5% compared to 2019. Between 2017 and 2020, imports decreased by 18.2%, equating to an annualized rate of 6.5%. The minimum value was recorded in 2019 at 64.3 million US dollars, with the largest decline of 21.3% occurring in 2018.

Annual dynamics of product's imports to MERCOSUR in value, 2017-2020, M $ US

In 2017–2020, the partner landscape for imports in value terms was wide. The United States accounted for 4.7% of imports, Chile for 3.6%, and Finland for 1.2%, with these three countries together forming only 9.5% of total flows. A substantial 90.5% was supplied from many other countries.

Structure of product's imports in value by countries, 2017-2020

World map of product's imports to MERCOSUR in value, 2017-2020