Uruguay's Dairy Industry: An In-Depth Analysis

Milk Production and Recovery

In 2024, Uruguay experienced a 10.6% decline in milk production due to adverse weather conditions. However, the industry showed resilience with a 5.7% recovery in milk deliveries during the first half of 2025, leading to an annual production of approximately 2.219 billion liters, with 1.9 billion liters processed.

Cheese and Milk Powder Production

Uruguay produces around 100,000 tons of cheese annually and is a strong exporter of milk powder and whey. Whole milk powder is particularly significant, making up two-thirds of the 150,000 tons exported each year, contributing substantially to the country's export revenues.

Key Enterprises and Export Markets

Conaprole, Uruguay's largest dairy cooperative, plays a central role in the sector's success. In 2024, dairy industry revenues reached USD 850 million, with main export markets including Brazil, Algeria, Russia, and China. By the first half of 2025, exports increased by 11%, approaching USD 500 million, driven mainly by whole milk powder and butter exports.

Market Trends and Financial Developments

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

Strategic and Labor Events

Labor disputes, particularly involving Conaprole and the AOEC, led to government intervention. A national strike followed the closure of a Conaprole distribution center in Rivera, highlighting the need for strategic partnerships to ensure industry stability.

Challenges and Opportunities

The sector faces challenges such as climate volatility and labor disputes. Initiatives are underway to address these, including discussions for a zero-tariff agreement with China and a trade agreement with the EU and Mercosur to enhance production capacity through strategic land acquisitions.

Environmental Innovation

Conaprole was recognized as a finalist in the IDF Dairy Innovation Awards 2025 for its sustainable practices, underscoring Uruguay's commitment to environmental innovation in dairy farming.

Export Growth

In October 2025, Uruguay exported 47,778 tons of dairy products. Dairy export revenue for the first ten months of 2025 increased by 19% compared to the previous year, driven by rising international demand for Uruguayan dairy.

Record Revenue in 2026

In the first four months of 2026, Uruguayan dairy farmers reported record gross revenue of $272 million, the highest in seven years, attributed to a production surge with 640 million liters of milk produced from January to April.

International Trade in Dairy Cattle

Uruguay has leveraged international trade opportunities by exporting dairy cattle to Turkey, providing significant numbers of heifers, representing a strategic opportunity for Uruguayan cattle breeders.

Technological Advancements

A new app developed in Uruguay has improved the income of 70% of pilot dairy farms by enhancing data management and production planning. This development was showcased at the Inale 2026 Forum, focusing on key aspects like animal feeding and production targets.

Diversification of Export Markets

Uruguay has expanded its export markets to Indonesia, diversifying its reach amid competition from established suppliers. Milk production increased significantly between January and April, with a 9% year-on-year rise, achieving a historic record in milk remittance with 2.212 billion liters in 2025.

Anti-Dumping Investigation

An anti-dumping investigation by the CNA revealed significant dumping margins for Uruguay. Despite this, tariffs have been temporarily suspended for political reasons to avoid inflationary impacts and maintain Mercosur relations. Uruguay plans to allocate 50% of a dairy export tax to the National Institute of Milk (Inale) to enhance financial independence.

Quality and Craftsmanship in Cheese Making

Uruguayan cheese makers have gained recognition for their quality, with Quesería Landkäse's Sardo with Pepper cheese winning a gold medal at ExpoQueijo Brazil 2026, showcasing the craftsmanship of the country's cheese makers.

Cheesemaking Tradition

Uruguay is home to around 800 artisanal cheesemakers who continue a tradition dating back to 1861. The cheesemaking tradition began with European immigrants, primarily from Switzerland, Germany, Austria, and Alsace. The first artisanal cheese factories were established in 1861, particularly in the Colonia and San José departments. The Queso Colonia, a semi-hard cheese first produced by Swiss settlers, symbolizes the country's culinary heritage.

Expansion Initiatives

The National Colonization Institute aims to expand dairy farming, focusing on supporting family-run dairy production projects crucial for the national economy. The Florida Milk Producers Society is conducting a pilot project with 43 male Holando calves to assess their viability amid high meat prices and changes in rearing systems.

Export Growth and New Markets

Uruguay maintained a strong growth rate of 9.7% in dairy production as of April 2026, furthering its reputation as a key exporter driving dairy production growth. Uruguay becomes the leading dairy exporter to Algeria, increasing its market share in Algeria's dairy imports from 21% to 26% between January and May 2026, surpassing New Zealand as the top exporter of whole milk powder.

Importance of Uruguay in Regional Trade

Part of Nestlé's strategy in the South American region encompasses Uruguay and Paraguay. Brazil's antidumping measures on powdered milk imports from Uruguay highlight the importance of Uruguay in Brazil's dairy import market. Uruguay is a key exporter of powdered milk and mozzarella to Brazil, contributing significantly to Brazil's daily imports.

Challenges in Milk Purchasing Power

Uruguay's milk purchasing power index fell to 95 points, marking an 11% decline from the previous year. The decline is primarily due to rising production costs and a reduction in the price of milk measured in local currency. Despite this growth, the purchasing power of milk fell by 10.8% due to lower prices and higher production costs.

Uruguayan Cooperative Claldy Initiatives

Uruguayan cooperative Claldy will introduce a differentiated payment scheme for milk. The cooperative Claldy in Uruguay has announced a new pricing strategy for milk during the peak production season from August to November, to manage supply and demand dynamics in the dairy market.

Export Revenue in 2025/2026

Uruguay's dairy exports reached a record $98 million in July. The substantial growth in exports was mainly attributed to whole milk powder, which experienced notable increases in both volume and value. Conaprole concluded its 2025/2026 fiscal year with a production of 1.73 billion liters of milk, marking a 14% increase from the previous year's 1.517 billion liters.

Export Shipment Data

Uruguay reported data for the second half of June. Shipments decreased by 28.23% to 7,494.18 tonnes, while the average price increased by 3.19% to $3,667.01 per tonne. Its destination markets fell from 26 to 24. June collections rose by 11.6% in Uruguay. Uruguay is targeting Indonesia and Vietnam to expand dairy exports and has sent an official mission to pursue new dairy business in these Asian markets.

Regional Standards and Initiatives

Uruguay is involved in the debate about regional standards, safety controls, and market access for artisanal cheeses. It is considering revising its own regulations in alignment with Mercosur provisions and is pursuing a certification initiative through the National Dairy Institute, known as INALE.

Weather Impact

Excessive rainfall reduced milk production and disrupted collection in some parts of Uruguay. Heavy rainfall slowed the growth of milk deliveries to Conaprole, Uruguay's dairy cooperative, from 15% to 6% and made collection more difficult in some areas.

Modified: 2026/08/28