Colombian Dairy Industry Faces Trade Agreement Challenges

The Impact of Trade Agreements on the Colombian Dairy Trade

The Colombian dairy trade faces growing pressures from international agreements, despite Colombia’s strong domestic dairy production sector. Trade agreements with the United States and the European Union are reshaping the industry, posing challenges for local producers.

Imports from the U.S. Affecting Colombian Dairy Trade

The Free Trade Agreement (FTA) allows tariff-free milk imports, yet only 2.4% of the 2025 quota had been filled by January 7. Historically, 40% of this quota was filled by January 1. A partial sanction on U.S. dairy imports, adding a 4.86% tariff, slowed imports further. With stocks of 21,000 tons of milk, importers are delaying purchases until this sanction expires on January 16, 2025.

Powdered Milk Imports from the EU

The EU’s powdered milk tariff-free quota for 2025 is 8,800 tons, with an extra-quota tariff of 18.4%. Bolivia also supplies Colombia with around 7,000 tons of powdered milk under the Andean Community (CAN) agreement.

Domestic Production and Market Challenges

Despite steady domestic milk production, the Colombian dairy trade continues to rely on imports. Processing companies leverage increased supply to negotiate lower prices with dairy farmers. Climate-related factors sometimes reduce production, yet overall supply remains stable.

Future Changes in Colombian Dairy Trade

Upcoming changes in FTA provisions include:

• January 1, 2026: U.S. powdered milk imports will become tariff-free.
• January 1, 2028: The same rule will apply to EU powdered milk imports.

Meanwhile, President Gustavo Petro’s government has expressed interest in renegotiating the FTA with the U.S., but progress remains limited.

Unfair Competition Concerns

Subsidies for U.S. and EU dairy sectors create market asymmetries, making it harder for Colombian dairy farmers to remain competitive. These conditions threaten local producers, requiring strategic adjustments to protect the industry.

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