By growing its own fodder, Alpura is setting an example of how the Mexican dairy sector can be more efficient.

While the Mexican dairy sector is forecast to increase milk production in 2008, there will still be a shortfall of almost 2.5 million liters between demand and supply. This deficit will be covered by imported powdered milk, making Mexican demand of this product one of the world’s highest.

While this gap between supply and demand clearly questions the productivity of the sector, in recent months the industry has felt further pressure from the rising prices of the grain that is used for livestock feed, which affects farmers, milk producers and consumers alike. The final implementation of NAFTA trade regulations has also stirred discontent both north and south of the Mexican border, amidst fears of further difficulties in selling milk for domestic consumption.

With dairy farmers recently protesting in Mexico City in an appeal to the government for protection from cheaper foreign alternatives, the question is how can the Mexican dairy sector show that being competitive in the domestic market and in the context of NAFTA is a reasonable goal?

One of the country’s biggest milk producing groups, Alpura Group, is leading the drive for improved efficiency and productivity through technical innovation and infrastructure investment, both issues that the Ministry of Agriculture already ruled essential in its 2007 drive for increased competitiveness in the national milk producing sector.

Alpura CEO Víctor J. Gavito has no doubts about the quality of the company’s products in the face of competition from the north: “Alpura’s raw milk is the same quality as the milk from California, and the productivity of our animals matches that of U.S. livestock. We produce most of our own fodder, and we use leading technology.”

Mr. Gavito does, however, see the need for improved management of the domestic market, which needs to come quickly. “The real challenge is the speed with which we can achieve the necessary growth. We need a different vision, one that considers how we should support our producers, how we can ensure that our products are sold at the right prices.”

Alpura Group, which in 2006 was the dairy sector’s most efficient company with EBITDA growth of 19%, oversees its milk production from start to finish. Formed over 35 years ago as a farmers’ association, Alpura’s members own shares that provide them with annual supply quotas. The group processes 2.8 million liters of milk daily in two processing plants, with milk supplied by more than 160 dairy farms throughout the country.

The eleven companies that form part of the group, whose activities include manufacturing supplementary products and improving the efficiency of livestock, contribute to Alpura Group’s vision of combining technology and constant quality control. They produce a range of top dairy products, which are distributed throughout Mexico.

With a clear commitment to quality, Alpura Group is a positive example of how supplying the Mexican dairy market in a productive and efficient manner can benefit individuals throughout the supply chain. It is also proof that increasing competition does not need to be a barrier to success.