Uruguay's Dairy Industry Overview

In recent years, Uruguay's dairy industry has faced various challenges and opportunities. Notably, in 2024, the sector experienced a 10.6% decline in milk production due to adverse weather conditions. However, the industry demonstrated resilience as milk deliveries improved by 5.7% during the first half of 2025. By the end of 2025, annual production reached approximately 2.219 billion liters, with 1.9 billion liters processed.

Cheese and Milk Powder Production

Uruguay is a significant player in cheese production and exports of milk powder and whey. The country produces about 100,000 tons of cheese annually. Whole milk powder is particularly important, making up two-thirds of the 150,000 tons exported each year, contributing significantly to export revenues.

Key Enterprises and Export Markets

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

Market Trends and Financial Developments

In July 2025, dairy export prices rose by 9%. As of June 2025, the average farm milk price increased to $17.8 per liter, which improved 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.

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, with dairy export revenue for the first ten months of 2025 increasing by 19% compared to the previous year, driven by rising international demand for Uruguayan dairy.

Record Revenue in 2026

During 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 capitalized on international trade opportunities by exporting dairy cattle to Turkey, providing significant numbers of heifers. This represents 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.

Challenges in Milk Purchasing Power

Uruguay's milk purchasing power index fell to 95 points, marking an 11% decline from the previous year, primarily due to rising production costs and a reduction in the price of milk measured in local currency.

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 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 Trends

Uruguay's dairy exports amounted to USD 64 million in August, a decline from the USD 90 million recorded in the same month a year earlier, representing a 29% decrease in export value. Uruguay has introduced electricity-charge discounts for milk producers and dairy companies for the 2026 calendar year, ranging from 15% to 80% depending on contracted power and, in some cases, consumption limits.

Retail and Distribution

Lucciano’s has four outlets in Uruguay, contributing to the retail landscape of the country's dairy market. Uruguay was mentioned in the context of competition with Brazilian producers. The increase in imports has generated objections from Brazilian producers and dairy companies concerning competition from products supplied by Argentina and Uruguay, both partners in Mercosur.

Trade Relations

Uruguay is involved in a trade case with Brazil regarding milk powder. Uruguay was allocated 324,000 tonnes of beef exports to China for 2026 under preferential tariff conditions. The country is also involved in a dairy dispute with Brazil concerning anti-dumping duties on milk powder. Products from Uruguay account for about 8% of the Rio Grande do Sul market. These products reach consumers at a lower cost than products made by local processors.

Uruguay reported sending 17 tonnes of powdered milk to Cuba as humanitarian aid. Uruguay's Foreign Ministry and Presidency stated they had no records of the shipment's origin, supplier or price. Uruguay’s dairy production rose by 9.8% to its highest recorded volume. Uruguay’s milk production increased by 9.8% during the 2025/26 production year, reaching 2.513 million litres. The volume was the highest recorded in the country. Productivity also rose during the period. Production reached 6,365 litres per cow. The number of dairy establishments declined to 2,945, deepening the concentration of Uruguay’s dairy sector.

Uruguay exported just over 11,000 tonnes of whole milk powder in August, the lowest monthly volume since February. Uruguay’s exports of whole milk powder reached slightly more than 11,000 tonnes in August, according to Tardáguila Agromercados. The weaker milk-powder shipments affected Uruguay’s broader dairy trade. Total dairy exports amounted to 17,821 tonnes in August, compared with more than 26,000 tonnes in July, representing a monthly decline of 32%.