Uruguay's Dairy Industry: An In-Depth Analysis

The dairy industry in Uruguay is characterized by a robust processing capacity and a resilient production landscape. Despite a 10.6% decline in milk production in 2024 due to adverse weather conditions, the industry rebounded in 2025 with a 5.7% increase in milk deliveries, totaling over 923 million liters in the first half of the year. The annual production reached approximately 2.219 billion liters, with about 1.9 billion liters processed.

Cheese and Milk Powder Production

Uruguay produces around 100,000 tons of cheese annually and is a significant exporter of milk powder and whey, with exports totaling about 150,000 tons each year. Whole milk powder constitutes two-thirds of these exports, playing a crucial role in the nation’s export revenues.

Key Enterprises and Export Markets

Conaprole, the largest dairy cooperative in Uruguay, is pivotal to the industry. In 2024, dairy revenues reached USD 850 million, with Brazil, Algeria, Russia, and China as primary export markets. The first half of 2025 witnessed an 11% growth in exports, approaching USD 500 million, largely driven by whole milk powder and butter.

Market Trends and Financial Developments

In July 2025, dairy export prices increased by 9%, and the average farm milk price rose to $17.8 per liter in June 2025, enhancing 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 led to intervention by the Ministry of Labour and Social Security. Potential plant closures and layoffs highlight the need for strategic partnerships to ensure stability. Conaprole declared a national strike initiated by the Union of Workers and Employees of Conaprole following the closure of a distribution center in Rivera.

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. Investigations into milk powder exports to Brazil and discussions for a zero-tariff agreement with China are ongoing.

Challenges and Opportunities

The sector faces challenges such as climate volatility and labor disputes, prompting initiatives to address these issues. A trade agreement with the EU and Mercosur is anticipated to bring transformative changes, enhancing production capacity through strategic land acquisitions.

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.

Export Growth

In October 2025, Uruguay exported 47,778 tons of dairy products. 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.

Record Revenue in 2026

Uruguayan dairy farmers reported a record gross revenue of $272 million in the first four months of 2026, the highest in the past seven years. This growth is attributed to a surge in production, with a total of 640 million liters of milk produced between January and April.

International Trade in Dairy Cattle

Uruguay has been a notable exporter meeting Turkey's demand for dairy cattle, providing a significant number of heifers to Turkey as a strategic opportunity for Uruguayan cattle breeders.

Innovative Uses of Dairy By-Products

Uruguayan company Prolesa will distribute $5 million in economic surpluses among dairy farmers. The University of Technology (UTEC) in Uruguay has developed a natural adhesive using by-products from the dairy industry, showcasing sustainable innovation.

International Trade Relations

Uruguay's milk powder exports were under investigation for alleged dumping by Brazil. The investigation into Uruguayan milk powder was closed by Brazil, eliminating uncertainty for the regional dairy market and maintaining open access to the Brazilian market. Uruguayan President Yamandú Orsi praised the decision and the efforts of the Uruguayan Foreign Ministry. Uruguayan dairy producers experience a reduction in financial debt. In early 2026, Uruguayan dairy producers saw a 13% reduction in financial debt. The financial landscape for Uruguayan dairy producers has improved as indicated by a 13% year-on-year decrease in sectoral credit usage from January to April, according to data from the Central Bank of Uruguay. Uruguay's agriculture minister heads a mission to resolve export restrictions on Conaprole's butter to Russia. The Uruguayan Minister of Livestock, Agriculture, and Fisheries is addressing the ongoing export restrictions due to sanitary concerns raised by Russian authorities.

Economic Impact

Uruguay showed a positive trajectory in dairy exports with increases in price, volume, and destinations. The average price in Uruguay rose by 2.62% to USD 3,596.29 per ton. Export volumes increased by 20.41% to 10,822.46 tons, and the number of destinations expanded from 24 to 26, marking an 8.33% rise. The country's oldest dairy cooperative, Coleme, has ceased operations. The closure of Coleme signifies a broader trend affecting small cooperatives and regional plants in Uruguay, which are struggling to maintain scale, secure raw materials, and compete in an increasingly consolidated market. A new app developed in Uruguay has improved the income of 70% of pilot dairy farms through enhanced data management and production planning. This development was part of a collaborative project focusing on key aspects like animal feeding and production targets, presented at the Inale 2026 Forum.

Uruguay's dairy exports in May reached $85 million, marking a 29% year-on-year growth. Uruguay's dairy export sector experienced a significant rebound, achieving a total of $85 million in exports. From January to May, the total value of Uruguay's dairy exports reached $346 million, reflecting a 1% increase from the same period last year.

Modified: 2026/06/08