Washington—Rising incomes, an expanding middle class, and dietary changes — aided by the Colombia- US Trade Promotion Agreement (TPA) — have helped boost US exports of dairy and other food products to Colombia, according to a new report from USDA’s Economic Research Service.

The report explores the performance of US agricultural exports to Colombia over the past decade (2009-19). It examines the 10 leading US agricultural exports to Colombia and five additional product categories — including milk concentrates and cheese — that are among the fastest-growing US exports to Colombia.

Macroeconomic conditions in Colombia, a middle-income developing country, have influenced Colombian food expenditures, the report said. Real growth in per capita income and low rates of food price inflation allow consumers to boost food expenditures, which could translate into people having more diverse diets, eating more expensive protein sources such as dairy and meat, and spending more on food away from home.

The Colombia-US TPA took effect in 2012. For almost all products, agricultural and nonagricultural, the TPA defines a clear path forward for removing the tariffs and quotas that formerly obstructed US exports to Colombia and Colombian exports to the US.

Among the fast-growing US agricultural exports to Colombia: milk concentrates. In 2019, Colombian imports of milk concentrates, or milk containing added sweetening (HS-4 Code 0402) totaled roughly $108 million. Milk powder accounted for 99.6 percent of those imports.

With the TPA’s implementation, the US has emerged as Colombia’s leading foreign milk-powder supplier, the report noted. The TPA provides a transitional tariff-rate quota (TRQ) for US milk powder, with a duty-free quota that gradually expands from 5,500 metric tons in 2012 to an unlimited quantity starting in 2026. Over-quota exports are subject to a tariff that is gradually reduced each year and then eliminated by 2026.

According to USDA’s Foreign Agricultural Service, in 2019, Colombian milk powder imports from the US totaled about 33,000 metric tons, with a value of $87 million, compared with a duty-free quota of 10,718 metric tons.

In 2020, the duty-free quota equaled 11,790 metric tons, and the over-quota tariff equaled 13.2 percent. For 2021, the duty-free quota equals 12,969 tons, and the over-quota tariff equals 11 percent.

Changes in consumer preferences, rising incomes, and the further development of the food retail sector are reshaping the Colombian dairy market, the report noted. For many Colombians, this means a shift away from powdered milk and toward milk subjected to ultra-high temperature processing (UHT milk). Unlike powdered milk, UHT milk is ready to drink.

Between 2011 and 2019, powdered milk production in Columbia fell slightly, while UHT milk output increased from about 41 million liters to 66 million liters. Most powdered milk imports go directly to the food manufacturing sector for processing. Thus, greater use of the marketing channel that brings imports directly to Colombian retailers could lead to increased imports of powdered milk.

Colombian cheese imports tend to be different from the fresh cheese traditionally produced in the country, the report said. In 2019, fresh cheese and curd accounted for 34 percent (in terms of volume) of Colombia’s cheese and curd imports; processed cheese — not grated or powdered — accounted for 17 percent; grated or powdered cheese accounted for 15 percent; blue-veined cheese NESOI accounted for 1 percent; and cheese NESOI, including Cheddar and Colby, accounted for 34 percent. The US supplied 77 percent of Colombia’s cheese imports in 2019 in volume terms.

The TPA includes a transitional TRQ for US cheese, with a duty free quota that gradually expands from 2,310 metric tons in 2012 to an unlimited quantity starting in 2026. Over-quota exports are subject to a tariff that is reduced every year and then eliminated in 2026.

In 2019, US cheese and curd exports totaled about 4,548 metric tons, compared with a duty-free quota of 4,502 metric tons. For 2020, the duty-free quota equaled 4,952 metric tons, and the overquota tariff equaled 13.2 percent, or 8 percent, with fresh cheese, grated or powdered cheese, and blue-veined cheese being subject to the lower tariff. For 2021, the duty-free quota equals 5,447 metric tons, and the over-quota tariff equals 11 percent, or 6.67 percent, with the same three cheese types again being subject to the lower tariff.