Uruguay's Dairy Industry: An In-Depth Analysis

Milk Production and Processing

Uruguay's dairy sector has seen fluctuating trends in recent years. In 2024, the industry faced a 10.6% decrease in milk production due to adverse weather conditions. However, the sector rebounded in 2025 with a 5.7% increase in milk deliveries, reaching over 923 million liters in the first half of the year. Annually, production reached approximately 2.219 billion liters, with about 1.9 billion liters processed, highlighting Uruguay's strong processing infrastructure.

Cheese and Milk Powder Production

Uruguay is a notable producer of cheese, generating around 100,000 tons annually. The country is also a major exporter of milk powder and whey, exporting about 150,000 tons each year. Whole milk powder constitutes two-thirds of these exports, significantly contributing to Uruguay's export revenues.

Key Enterprises and Export Markets

Conaprole, Uruguay's largest dairy cooperative, plays a pivotal role in the industry. In 2024, dairy revenues reached USD 850 million, with major export markets including Brazil, Algeria, Russia, and China. The first half of 2025 saw an 11% growth in exports, nearing USD 500 million, driven primarily by whole milk powder and butter.

Challenges and Opportunities

The sector faces challenges such as climate volatility and labor disputes. Significant rainfall in 2024 led to climate initiatives. A trade agreement with the EU and Mercosur is expected to bring transformative changes. Strategic land acquisitions offer opportunities for expanding production capacity.

Market Trends and Financial Developments

In July 2025, dairy export prices increased by 9%. The average farm milk price rose to $17.8 per liter in June 2025, improving financial conditions for producers. Bank debt among farmers decreased to $190 million, the lowest in 30 months.

Strategic and Labor Events

Labor disputes involving Conaprole and AOEC required intervention by the Ministry of Labour and Social Security. Potential plant closures and layoffs underscore the need for strategic partnerships for stability.

Recent Developments

In April 2025, the milk price for producers increased by 11% to $18.05 per liter. Despite global market volatility, Conaprole maintains stability with favorable price levels. An investigation into milk powder exports to Brazil and discussions for a zero-tariff agreement with China are ongoing.

Economic Challenges

Lease prices fell by 9% in 2024 due to declining profitability and adverse weather, with the average lease price for dairy farms at approximately $242 per hectare annually.

Strategic Alliances and Agreements

Uruguay, as part of Mercosur, stands to gain from the EU agreement, potentially increasing exports by up to $30 billion annually, with half in agribusiness products. However, a decline in Chilean imports of Uruguayan whole milk powder has impacted overall import figures.

Changes in Dairy Cattle and Land Use

The dairy herd expanded, but overall production decreased compared to the previous year. As of June 30, 2025, the milking herd grew, while heifers declined significantly. 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 decreased, with 2,391 remaining, indicating a loss of about 90 farms.

Regulatory Developments

The Ministry of Livestock, Agriculture, and Fisheries (MGAP) established new requirements for processing facilities to enhance transparency, hygienic control, and quality.

Environmental Innovation

Conaprole is a finalist in the IDF Dairy Innovation Awards 2025 for its sustainable dairy practices. Uruguay competes internationally in environmental innovation through sustainable dairy farming practices.

Sector Dynamics

Uruguay's dairy industry features promising international growth alongside significant labor conflicts. The National Milk Institute reported a 13% year-over-year increase in revenue, with exports totaling USD 678.9 million so far, suggesting a potentially record-breaking year in 2025.

Dairy Supply Trends

Milk supply increased by 2.6% year-on-year in October 2025, although the growth rate has moderated compared to previous months. The industry relies heavily on both domestic consumption and exports.

Investment in Processing Facilities

Jugos del Uruguay is investing in a new dairy processing facility in Fray Bentos, as part of efforts to boost dairy production and support local industry growth.

Trade and Investigations

Uruguay is part of an antidumping investigation by Brazil concerning potential below-market pricing of milk powder exports, which could undercut local producers.

Export Growth

Uruguay exported 47,778 tons of dairy products in October 2025. For the first ten months of 2025, dairy export revenue increased by 19% in dollar terms compared to the previous year. The growth is attributed to rising international demand for Uruguayan dairy products, which are vital to Uruguay's economy and significantly bolster export revenue.

Budgetary Concerns

Uruguayan dairy producers and industry representatives have expressed dissatisfaction with the budget allocated to the National Institute of Milk (INALE), citing financial constraints as a significant challenge.

Future Prospects

Uruguay's dairy exports generated $881.5 million from January to November 2025, a 14% increase over 2024. The sector is nearing a new milestone in export revenues, potentially surpassing the 2022 record. The rise in export value is due to higher global demand for Uruguayan dairy products. Strategic trade partnerships have played a crucial role in this growth. Uruguay, a key player in the global dairy market, is poised to contribute to this growing demand. The country's dairy sector has been preparing to enhance its production capabilities, leveraging technological advancements and improved farming practices to meet both domestic and international demand.

Modified: 2025/12/28