Argentina, Uruguay Face Challenging Year in Primary Production Amid Mixed Recovery Signs
Source: DairyNews.today
Primary production in Argentina and Uruguay, key exporters in South America, remains below 2023 levels despite signs of recovery in recent months. Both nations have faced economic and environmental challenges that have curtailed output, with impacts rippling through domestic and export markets.
Argentina: Recovery in Sight but Annual Decline Persists
Argentina's primary production improved in October, with a 4.3% month-on-month increase compared to September. However, cumulative production for 2024 remains 8.5% lower year-over-year, according to official data from the Dirección Nacional de Lechería (DNL).
Despite forecasts for a stronger close to the year, experts project an annual decline of 6-7%. While domestic dairy farms have struggled, the impact on exports has been mitigated by a sharp drop in domestic consumption amid an economic recession that has constrained household spending.
Uruguay: Declines in Volume and Export Value
In Uruguay, October industrial dairy remittances dropped 1% compared to the same period in 2023, contributing to a 4.2% decline in production for the year through October. Notably, the decline in milk solids, including fat and protein, was steeper at 3%, indicating a broader quality impact on production.
The reduced production has coincided with a drop in export revenues. While shipment volumes to key markets such as Brazil and Algeria have remained robust, prices for exported products have declined. According to the Instituto Nacional de la Leche (INALE), Uruguay’s dairy export revenue in October 2024 fell 2% year-over-year, driven by lower global prices for key dairy products.
Challenges and Outlook
Both countries face structural challenges, including fluctuating global demand and local economic pressures. Argentina’s recession has squeezed domestic demand, reducing pressure on exports despite lower production. Uruguay’s producers are grappling with price declines that undercut earnings despite steady export volumes.
As spring brings improved conditions, producers in both nations aim to stabilize output, but overall production for 2024 is expected to remain below the previous year's levels.
The sector’s ability to recover in 2025 will depend on a combination of favorable weather, stable economic policies, and sustained demand in key export markets. For now, Argentina and Uruguay’s primary production sectors are navigating a challenging close to the year, marked by cautious optimism and persistent hurdles.
Argentina's primary production improved in October, with a 4.3% month-on-month increase compared to September. However, cumulative production for 2024 remains 8.5% lower year-over-year, according to official data from the Dirección Nacional de Lechería (DNL).
Despite forecasts for a stronger close to the year, experts project an annual decline of 6-7%. While domestic dairy farms have struggled, the impact on exports has been mitigated by a sharp drop in domestic consumption amid an economic recession that has constrained household spending.
Uruguay: Declines in Volume and Export Value
In Uruguay, October industrial dairy remittances dropped 1% compared to the same period in 2023, contributing to a 4.2% decline in production for the year through October. Notably, the decline in milk solids, including fat and protein, was steeper at 3%, indicating a broader quality impact on production.
The reduced production has coincided with a drop in export revenues. While shipment volumes to key markets such as Brazil and Algeria have remained robust, prices for exported products have declined. According to the Instituto Nacional de la Leche (INALE), Uruguay’s dairy export revenue in October 2024 fell 2% year-over-year, driven by lower global prices for key dairy products.
Challenges and Outlook
Both countries face structural challenges, including fluctuating global demand and local economic pressures. Argentina’s recession has squeezed domestic demand, reducing pressure on exports despite lower production. Uruguay’s producers are grappling with price declines that undercut earnings despite steady export volumes.
As spring brings improved conditions, producers in both nations aim to stabilize output, but overall production for 2024 is expected to remain below the previous year's levels.
The sector’s ability to recover in 2025 will depend on a combination of favorable weather, stable economic policies, and sustained demand in key export markets. For now, Argentina and Uruguay’s primary production sectors are navigating a challenging close to the year, marked by cautious optimism and persistent hurdles.
