Overview of Uruguay's Dairy Industry

Uruguay stands as a significant force in the South American dairy sector, bolstered by its modern infrastructure and strategic presence in global markets. The country supports approximately 720,000 dairy cows, highlighting its strong milk production capabilities, which are vital to the national economy.

Milk Production and Processing

In 2024, Uruguay's dairy sector encountered challenges due to excessive rainfall, leading to a 10.6% decrease in production. However, by 2025, the industry showed resilience with milk deliveries increasing by 5.7%, surpassing 923 million liters in the first half of the year. Annually, the country processes around 1.9 billion liters of milk, reflecting its robust processing infrastructure.

Cheese and Milk Powder Production

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

Key Enterprises and Export Markets

Conaprole, Uruguay's largest dairy cooperative, plays a pivotal role in the nation's dairy production and processing. As a net exporter, Uruguay's export revenues reached USD 850 million in 2024. Key export markets include Brazil, Algeria, Russia, and China. In the first half of 2025, dairy exports grew by 11%, nearing USD 500 million, driven primarily 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 led to initiatives addressing climate impacts. Additionally, a historic trade agreement with the European Union and the Mercosur bloc is anticipated to bring significant changes. Strategic developments, such as land acquisitions, present opportunities for expanding production capacity.

Market Trends and Financial Developments

In July 2025, Uruguay experienced a notable 9% increase in average dairy export prices, despite fewer export destinations. The industry is recovering, with the average farm milk price reaching $17.8 per liter in June 2025, offering real improvements for dairy producers.

Strategic and Labor Events

Significant events include labor disputes involving Conaprole and its union, AOEC, which led to interventions by the Ministry of Labour and Social Security. The sector also faces uncertainty with potential plant closures and layoffs, underscoring 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 offering favorable price levels. The industry is 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 economic challenges, with lease prices decreasing by 9% due to declining profitability and adverse weather impacts in 2024. The average lease price for dairy farms was approximately $242 per hectare annually, marking a notable decline from the previous year.

Strategic Alliances and Agreements

As part of Mercosur, Uruguay stands to benefit from the EU agreement for agriculture, potentially adding up to $30 billion in annual exports, with half in agribusiness products. However, Chile's import of whole milk powder from Uruguay saw a drastic decline, affecting overall dairy imports.

Changes in Dairy Cattle and Land Use

The Uruguayan dairy herd has expanded, but milk production has decreased compared to the previous year. As of June 30, 2025, the milking herd grew while the category of heifers saw a significant decline. Preliminary data from the SNIG shows a dairy cattle stock of around 677,000 heads, slightly lower by 1% from the previous year. There was a 2% increase in milking cows, totaling 299,616 heads, but heifers over 2 years of age decreased by 9.8%. Moreover, there was a reduction in dairy producers, with 2,391 reported, signifying the loss of about 90 farms in the last year. The area dedicated to dairy farming also declined, losing about 11,000 hectares compared to June 2024. The annual milk production was approximately 2.219 billion liters.

Regulatory Developments

Uruguay's Ministry of Livestock, Agriculture, and Fisheries (MGAP) has established new documentary and operational requirements for dairy processing facilities. These regulations enhance standards of transparency, hygienic control, and quality in industrial processes. Uruguay remains a major exporter of whole milk powder, with a notable presence in the Chinese market.

Recent Export Developments

In September 2025, Uruguay's dairy sector reported a remarkable 28% increase in export requests, totaling USD 92 million. This expansion underscores the dairy sector's pivotal role in the nation's export landscape.

Producers from Uruguay competed in an international fair involving over 340 cheeses from across the Americas.

Modified: 2025/10/08