Recombinant bovine somatotropin (rBST) has been used in Mexico since 1990. Because of the distorted world market and the domestic price control on fresh milk, application of rBST has not resulted in the expected decrease in milk imports. It is especially the large-scale dairy sector that has benefitted from its introduction, while under the current conditions, the rest of the sector is unable to benefit.

Increasing milk production is of great importance to Mexico, considering that in 1995 this country covered 39 per cent of its total milk consumption by the import of primarily powdered milk. This deficit in production, together with a lack of strict (bio)safety regulations and the absence of critical, organized consumer groups addressing the use of biotechnology in agriculture and food manufacture, favoured the introduction of rBST in Mexico’s milk production sector. It was expected that in the short term a greater volume of milk could be obtained with the same number of animals. For this reason, rBST was readily introduced in Mexico in 1990, four years before its use was approved in the USA.
National milk production has increased since 1990, but so have milk imports both in absolute and relative terms (with the exception of 1995 when imports were limited due to Mexico’s economic crisis). Firstly, the import increase was the result of the dynamics of the world milk market which cannot be considered a free market but is regulated by means of quotas and export subsidies in the main producing countries. Subsidized export of their surplus of milk and dumping of milk reserves by these countries resulted in a low world market price with which Mexican producers could not compete.
Secondly, the government policy regarding milk supply in Mexico includes a system of comparative advantages by which preference is given to the purchase of food from abroad at prices below the domestic production costs, even though this affects Mexico’s production sector. In addition, price controls have been established for fresh milk (when packed in one litre containers) in order to subsidize the consumer. In the case of cheese, cream, butter, yoghurt and other dairy products there is no price control.
 

Where is rBST approved? The use of rBST is not allowed in the 15 member countries of the EU, Australia, Canada, New Zealand, and Norway. The following countries have approved the use of rBST:    Africa Asia  Americas  Europe Algeria Namibia  South Africa* Zimbabwe* Malaysia* Pakistan  South Korea  Brazil*  Costa Rica  Honduras  Jamaica  Mexico*  USA*  Venezuela  Bulgaria Czech Republic* Rumania  Russia  Slovakia Notes:  Countries in which Posilac, Monsanto’s trade name for rBST, is being sold are marked with *.  In other countries a product made by Elanco is sold, or a nationally made product (under official license or as an illegal imitation).

The Mexican dairy sector
Mexico’s dairy sector is very heterogeneous across the country. Based on the breeds of cattle used, the 0.8 million dairy cows (in 1992), can be divided up into three production systems.
(1) The specialized system is located mainly in the central and northern regions of Mexico. The intensive production is achieved by the use of Holstein cattle kept in stables, the ample application of modern technology and management practices, and an intensive use of forages and feed concentrates. This system comprises 17 per cent of Mexico’s milking herd and supplies 59 per cent of the national milk production, with an average production of 5,625 litres per head per year.
(2) The dual purpose system (the combined production of milk and meat) is composed of crossbreds of Holstein and Zebu cattle kept primarily under grazing conditions in the tropical regions of Mexico. It scarcely uses modern dairy technology and management practices. This system comprises 39 per cent of the national milking herd and contributes 33 per cent to the national milk production. The average productivity is 1,356 litres/head/year.
(3) The seasonal system is characterized by the milking of beef cows during the rainy season. Modern technology is basically non-existent. This system comprises 44 per cent of the national milking herd, but only supplies 7 per cent of the milk production. The average productivity 284 litres/head/year.
An organized market exists for the specialized system, for which milk is processed mainly by co-operatives and large dairy enterprises. In this system, quality control is more strict. The milk is mainly processed to supply pasteurized milk and dairy products to the main urban centres in the country. Therefore, the Mexican government policy to control the milk price applies basically to this production system. Consequently, the specialized system is more sensitive to inflation, which causes a constant increase in input costs, while the price control of milk does not allow farm income to increase at the same rate. Some large milk processing plants have tried to escape from the price control system by diverting more milk to the production of cheese and other soft dairy products or by packing the milk in containers of another size than one litre. However, the fear of losing market share, or the cost of re-engineering have deterred major structural changes in this sector of the dairy industry.
The marketing of milk for the dual purpose and seasonal systems is very diverse, and often lacks quality and sanitary controls. The producers in these systems sell their milk to large corporations such as Nestlé, small and local dairy processing plants, small family cheese factories, or they distribute raw milk door-to-door in order to by-pass the price control system imposed by the government. The low input strategy by which these two systems are characterized, allows them a larger margin per litre of milk, although production levels are also limited.

Differentiated benefits for producers
Use of rBST is a well known, but not predominant practice in the specialized sector, and the results correspond to those recorded in developed countries: an average milk production increase of 2 to 3 litres, or 10 per cent, per cow per day. The cost-benefit evaluation of the use of rBST has been favourable for the producers of this system. Their financial situation enables them to face the increased production costs due to the use of the hormone.
However, the other two sectors do not benefit from the application of rBST. Under their conditions, it has not been demonstrated that under these conditions the added income because of an increased milk production offsets the increment in production costs due to the purchase of the hormone and additional feed and management costs.

Human health issues
The US Food and Drug Administration (FDA) has not found any harmful effects on humans as a result of the consumption of milk from cows that have been treated with rBST. According to them, the hormone acts exclusively on the organism of the cow. Nevertheless, consumer groups are concerned that the metabolism of people who drink milk from cows being treated with hormones could be altered. Monsanto, the US company marketing the hormone, claims that rBST is a protein hormone, not a steroid one, and therefore has no metabolic repercussions.
In the mean time, neither the government nor consumer groups have taken the opportunity to conduct long-term impact studies of milk consumption produced by rBST on the population. No effects on consumer health have been reported in the press.

Perspectives
As multiple studies show, rBST offers an opportunity to increase milk production. However, changes in management are necessary in order to fully benefit from its use. This requires the commitment and capacity of dairy farmers across the different production systems in Mexico.
The introduction of rBST in the Mexican dairy sector has been partially successful since only a portion of the specialized system has adopted rBST. Some producers of the specialized system have never used rBST because they were not convinced of its economic merit. Some others have stopped its use because the levels of production reached under their current management were lower than expected and had a negative economic impact. In many instances, rBST is applied to alternative uses in the farm such as supporting the end of the lactation of late breeding cows or conditioning cows before the dry period.
The recent steps in the liberalization of the milk price and the improvement of the Mexican economy might widen the scope of influence of rBST in the specialized production system. Under these circumstances, rBST might help to increase the national production of milk. From an economic point of view this means that the foreign currency spent on milk imports would decrease and the dependence on foreign food supplies diminish.
The perspective to extend the use of rBST in the dual purpose and seasonal production systems are less prosperous. There is a strongly sustained idea that Mexico’s tropical regions offer an important potential for livestock production due to their abundant forage resources. But it is doubtful whether the use of rBST will be contributive to the exploitation of this potential. Given the low productivity of the cows in Mexico’s tropical regions and the cost of the hormone, a proportionally large increment in milk production is required to make the use of rBST economically feasible. Isolated attempts to test rBST under these conditions have not been successful to determine its benefits. The availability of forages alone does not guarantee a net increase in milk production after applying the hormone if no major changes in management conditions take place as well. Furthermore, the common low input production strategy does not offer high expectations for the future utilisation of rBST in these production systems in Mexico.
Michelle Chauvet*/Rene F. Ochoa**

*Universidad Autónoma Metropolitana, Unidad Azcapotzalco, Departamento de Sociología, Av. San Pablo 180, Mexico
D.F., C.P. 02200. Phone (+525) 724 4344; Fax (+525) 394 8093; E-mail chauvet@profmexis.sar.net

**Texas A&M University, Department of Agricultural Economics, College Station, Texas 77843 2124, USA. Phone (+1) 409 845 8014; Fax (+1) 409 845 3140; E-mail r-ochoa@tamu.edu

Sources
A.K.Galve-Peritore (eds), Biotechnology in Latin America: Politics, impacts and risks. Wilmington, USA: Scholarly Resources Inc. Imprint, pp.137-146.

L. Ocampo, M. Morales, H. Basurto and A. Auro (1995), "Effect of Bovine Somatotropin in Cows in the Tropics". Veterinary Mexican Review, vol. 26, no.2, pp.37-39.

Ch. Nicholson (1995), Mexico’s Dairy Sector in the 1990s: A descriptive analysis. Research Bulletin 95-05. Department of Agriculture, Resources and Managerial Economics. Cornell University

C. Del Valle (1993), Milk Production Front News Threat. Texte de Recherche No.22. Paris: Institut d’Etude du Développement Economique et Social, Université de Paris I, pp.1-14.