Overview of Uruguay's Dairy Industry

Uruguay stands as a pivotal player in the South American dairy sector, bolstered by modern infrastructure and a strategic presence in regional and global markets. The industry is supported by approximately 720,000 dairy cows, which underline its substantial milk production capabilities.

Milk Production and Processing

In 2024, Uruguay's dairy sector faced challenges due to excessive rainfall, resulting in a 10.6% decrease in production. However, the industry demonstrated resilience with a strong recovery in 2025, as milk deliveries increased by 5.7%, surpassing 923 million liters in the first half of the year. Annually, Uruguay processes around 1.9 billion liters of milk, showcasing its robust processing infrastructure.

Cheese and Milk Powder Production

Cheese production is a significant component of Uruguay's dairy industry, with an annual output of approximately 100,000 tons. Additionally, the country exports around 150,000 tons of milk powder and whey each year, with whole milk powder accounting for two-thirds of these exports, generating substantial revenue.

Key Enterprises and Export Markets

Conaprole, the largest dairy cooperative in Uruguay, plays a central role in the country's dairy production and processing. Uruguay is a net exporter of dairy products, with export revenues reaching USD 850 million in 2024. Major export markets include Brazil, Algeria, Russia, and China. In the first half of 2025, dairy exports grew by 11%, nearing USD 500 million, primarily driven by products like whole milk powder and butter.

Challenges and Opportunities

The industry faces challenges such as climate volatility and labor disputes. In 2024, heavy rains prompted initiatives to mitigate climate impacts. A historic trade agreement with the European Union and the Mercosur bloc is anticipated to bring significant changes. Opportunities also arise from strategic developments, such as land acquisitions to expand production capacity.

Market Trends and Financial Developments

In July 2025, Uruguay experienced a significant price increase, with average dairy export prices rising by 9%, despite a decrease in the number of export destinations. The industry is in a recovery phase, with the average price of milk on farms reaching $17.8 per liter in June 2025, providing real improvements for dairy producers.

Strategic and Labor Events

Significant events include labor disputes involving Conaprole and its union, AOEC, leading to interventions by the Ministry of Labour and Social Security. The sector also faces uncertainty with potential plant closures and layoffs, highlighting the need for strategic collaborations to ensure stability.

Recent Developments

In April 2025, the price paid to milk producers rose by 11%, reaching $18.05 per liter. Despite global market volatility, Conaprole maintains stability by providing good price levels. The industry is also under scrutiny with an investigation into Uruguay's milk powder exports to Brazil and ongoing discussions for a zero-tariff agreement with China.

Economic Challenges

Uruguay's dairy sector faces significant economic challenges, as lease prices decreased by 9% due to declining profitability and adverse weather impacts during 2024. This decline is primarily attributed to reduced profitability caused by a decrease in milk prices and drought conditions. The average lease price for dairy farms was approximately $242 per hectare annually, marking a notable decline from the previous year. The sector is under economic stress, with lower milk prices paid to producers and drought affecting pastures and water supply. The Minister of Labor and Social Security, Juan Castillo, has successfully facilitated the temporary suspension of labor actions taken by the union of Conaprole, the Asociación de Obreros y Empleados de Conaprole (AOEC). Negotiations focus on preserving production in northern Uruguay, particularly at the Rivera plant, with significant anticipation regarding its future.

Uruguay's National Dairy Institute (INALE) is facing financial challenges. The projected five-year budget for Uruguay's National Dairy Institute (INALE) has stirred alarm within the industry due to its failure to account for pre-existing commitments. The institute is now operating without additional funds and risks ceasing operations if immediate budget adjustments are not made.

Part of Mercosur benefiting from the EU agreement for agriculture. The agreement opens the European market to agriculture, potentially adding up to $30 billion in annual exports, with half in agribusiness products.

Modified: 2025/09/17