Overview of Uruguay's Dairy Industry

Uruguay stands as a significant force in the South American dairy sector, characterized by modern infrastructure and a strategic global market presence. The country plays a vital role in the national economy through strong milk production capabilities.

Milk Production and Processing

In 2024, the dairy sector faced a 10.6% production decrease due to excessive rainfall. However, by 2025, the industry demonstrated resilience with a 5.7% increase in milk deliveries, exceeding 923 million liters in the first half of the year. Annually, milk production reached approximately 2.219 billion liters, and around 1.9 billion liters are processed, highlighting the country's robust processing infrastructure.

Cheese and Milk Powder Production

Cheese production is significant, with an annual output of about 100,000 tons. Uruguay exports roughly 150,000 tons of milk powder and whey annually, with two-thirds being whole milk powder, contributing substantially to export revenues.

Key Enterprises and Export Markets

Conaprole, Uruguay's largest dairy cooperative, is pivotal in dairy production and processing. As a net exporter, Uruguay's revenues reached USD 850 million in 2024. Key markets include Brazil, Algeria, Russia, and China. In the first half of 2025, exports grew by 11%, nearing USD 500 million, driven by whole milk powder and butter.

Challenges and Opportunities

Challenges include climate volatility and labor disputes. Heavy rains in 2024 led to climate impact initiatives. A trade agreement with the EU and Mercosur is anticipated to bring changes. Strategic developments like land acquisitions offer opportunities for expanding production capacity.

Market Trends and Financial Developments

In July 2025, a notable 9% increase in average dairy export prices was observed. The industry is recovering, with the average farm milk price reaching $17.8 per liter in June 2025, providing improvements for producers.

Strategic and Labor Events

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

Recent Developments

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

Economic Challenges

Lease prices decreased by 9% due to declining profitability and adverse weather in 2024. The average lease price for dairy farms was approximately $242 per hectare annually, marking a decline from the previous year.

Strategic Alliances and Agreements

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

Changes in Dairy Cattle and Land Use

The dairy herd expanded, but production decreased compared to the previous year. As of June 30, 2025, the milking herd grew, while heifers saw a significant decline. Dairy cattle stock was 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 decreased by 9.8%. The number of dairy producers declined, with 2,391 reported, signifying a loss of about 90 farms. The area dedicated to dairy farming also declined, losing about 11,000 hectares.

Regulatory Developments

The Ministry of Livestock, Agriculture, and Fisheries (MGAP) established new requirements for processing facilities, enhancing transparency, hygienic control, and quality. Uruguay remains a significant exporter of whole milk powder, with a notable presence in China.

Recent Export Developments

In September 2025, there was a 28% increase in export requests, totaling USD 92 million, underscoring the dairy sector's role in exports. Uruguay experienced a 3.0% YoY increase in milk production, contributing to the global supply. The sector is positioned for a potentially record-breaking year in 2025, with significant growth in production and solid content submissions.

Environmental Innovation

Uruguay's Conaprole is a finalist in the IDF Dairy Innovation Awards 2025 for its environmentally sustainable dairy approach. The Uruguayan dairy sector, represented by Conaprole, competes internationally in environmental innovation through sustainable practices in dairy farming.

Sector Dynamics

Uruguay's dairy industry is currently characterized by dual developments: promising international growth and significant labor conflicts. The sector is experiencing a complex situation with the partial reopening of the Rivera plant and labor conflicts. Statistics from the National Milk Institute indicate a 13% year-over-year increase in revenue for the industry, with exports totaling USD 678.9 million so far, and projections suggesting the sector may set a third historical record.

In Uruguay, dairy producers have called for the National Institute of Milk (INALE) to adopt a more proactive promotional role. The meeting highlighted the importance of INALE in supporting the dairy sector, especially considering the challenges faced by producers in the global market. INALE plays a pivotal role in the dairy industry of Uruguay, which is a key component of the country's agribusiness.

Modified: 2025/10/29