Overview of Uruguay's Dairy Industry

Uruguay holds a prominent position in South America's dairy sector, with a commitment to serving both regional and global markets. The country's dairy industry is supported by advanced infrastructure and a strategic market presence.

Dairy Cattle and Milk Production

The Uruguayan dairy industry is supported by approximately 720,000 dairy cows. In early 2024, milk production increased by 2.2%, but excessive rainfall in the second quarter led to a 10.6% decrease. A recovery in 2025 saw a 5.7% increase in milk deliveries, exceeding 923 million liters in the first half of the year.

Milk Processing and Cheese Production

Uruguay processes around 1.9 billion liters of milk annually. Cheese production is significant, with an annual output of about 100,000 tons, highlighting Uruguay's proficiency in value-added dairy processing.

Milk Powder and Whey Production

As a notable participant in the global dairy trade, Uruguay exports approximately 150,000 tons of milk powder and whey annually. Whole milk powder represents two-thirds of these exports, generating substantial revenue for the industry.

Key Dairy Enterprises

Conaprole, Uruguay's largest dairy cooperative, along with Purisima, plays an integral role in the national dairy industry, central to the country's production and processing capabilities.

Dairy Farms and Plants

The industry comprises about 3,700 mid-sized, family-owned farms, emphasizing the importance of family enterprises and modern agricultural practices in Uruguay's dairy sector.

Export and Import of Dairy Products

Uruguay is a net exporter of dairy products, with export revenues reaching approximately USD 850 million in 2024. Major markets include Brazil, Algeria, Russia, and China. In the first half of 2025, dairy exports rose by 11%, nearing USD 500 million, driven by whole milk powder and butter.

Significant Events in the Dairy Industry

In 2024, heavy rains challenged milk production, prompting initiatives to mitigate climate impacts. A historic trade agreement with the European Union and the Mercosur bloc is expected to bring significant changes. Strategic developments included Froneri's acquisition of CRUFI and Lactalis' plans to acquire Granja Pocha.

Recent Developments

In April 2025, the price paid to milk producers rose by 11%, reaching $18.05 per liter. By May 2025, dairy export revenues increased by 10% year-on-year, totaling $358 million. Despite global market volatility, Conaprole maintains stability by providing good price levels.

Labor Disputes and Competitive Pressures

The Ministry of Labour and Social Security intervened in a labor dispute between Conaprole and its union, AOEC, following a 24-hour strike, highlighting vulnerabilities and the need for collaboration to prevent supply chain disruptions.

Sectoral Challenges and Opportunities

The sector faces challenges, including climate volatility and economic pressures, but there are growth opportunities, such as the potential revitalization of the COLEME plant in Cerro Largo and land purchases in Florida for dairy production.

Price Developments

In June 2025, the average price of milk on farms reached $17.8 per liter, surpassing inflation and offering a real improvement for dairy producers, indicating a recovery phase for Uruguay's dairy value chain.

Industry Challenges

The sector faces uncertainty, with layoffs at Claldy and proposed delays in the closure of Conaprole's plant in Rivera due to low milk intake and declining fresh milk consumption.

Strategic Land Acquisition

The National Colonization Institute (INC) purchased the "María Dolores" estate for $32.2 million, addressing challenges in scale and land ownership. Balancing economic growth with social stability is crucial for a sustainable future.

Labor Instability

The industry faces its third strike in a month due to labor condition protests, with the Federation of Dairy Industry Workers announcing a 24-hour national strike.

Brazil's Milk Powder Import Investigation

Uruguay's involvement in milk powder imports to Brazil is under investigation, with ongoing discussions for a zero-tariff agreement with China to expand Uruguay's dairy industry. The dismantling of Grupo Gloria's plant in Nueva Helvecia raises concerns about local dairy production and regional economic impacts.

Market Trends

Uruguay experienced a considerable price increase in July 2025. The average price of dairy exports rose by 9% from USD 3,921.28 to USD 4,273.69 per ton, with volumes marginally up by 1.99%, totaling 8,330.17 tons. The number of destinations dropped from 38 to 29, indicating a less diverse market reach. Specific product trends showed Whole Milk Powder's price up by 0.67% and Hard Cheese's price was significantly higher by 15.32%.

The Uruguayan dairy sector has made a strong start to the year with the export of dairy products experiencing an impressive 11% growth. This growth underscores the robustness and competitiveness of Uruguay's dairy industry, marking a positive milestone for the nation's economy. The increased demand for key products such as powdered milk and UHT milk has driven this export success, demonstrating Uruguay's ability to adapt to the competitive global market. The value of these exports has reached a significant figure of $500 million so far this year.

Modified: 2025/08/28