Uruguay's Dairy Industry: An In-Depth Analysis

The dairy industry in Uruguay stands as a cornerstone of the nation's agricultural economy, marked by its substantial processing capacity and resilience amidst challenges. Despite a notable 10.6% decline in milk production in 2024 due to adverse weather conditions, the industry rebounded in 2025. In the first half of 2025, milk deliveries increased by 5.7%, reaching over 923 million liters. By the end of 2025, annual production was approximately 2.219 billion liters, with around 1.9 billion liters processed.

Cheese and Milk Powder Production

Uruguay is a significant producer of dairy products, with an annual cheese production of approximately 100,000 tons. The country is also a major exporter of milk powder and whey, exporting about 150,000 tons annually. Whole milk powder makes up two-thirds of these exports, significantly boosting the nation's export revenues.

Key Enterprises and Export Markets

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

Market Trends and Financial Developments

July 2025 witnessed a 9% increase in dairy export prices, and by June 2025, the average farm milk price rose to $17.8 per liter, improving the financial conditions for dairy producers. Furthermore, bank debt among farmers decreased to $190 million, marking the lowest level in 30 months.

Strategic and Labor Events

Labor disputes have posed significant challenges, involving Conaprole and AOEC, prompting intervention by the Ministry of Labour and Social Security. These disputes have underscored the need for strategic partnerships to ensure industry stability, with Conaprole facing a national strike following the closure of a distribution center in Rivera.

Challenges and Opportunities

The sector faces challenges such as climate volatility and labor disputes, prompting initiatives to address these issues. Discussions for a zero-tariff agreement with China and a trade agreement with the EU and Mercosur are anticipated, aiming to enhance production capacity through strategic land acquisitions.

Environmental Innovation

Conaprole has been recognized as a finalist in the IDF Dairy Innovation Awards 2025 for its sustainable dairy practices. This recognition highlights Uruguay's commitment to 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, attributed to rising international demand for Uruguayan dairy products.

Record Revenue in 2026

Uruguayan dairy farmers reported record gross revenue of $272 million in the first four months of 2026, the highest in the past seven years, due to a surge in production with 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 by providing a significant number of heifers, representing a strategic opportunity for Uruguayan cattle breeders.

Innovative Uses of Dairy By-Products

The Uruguayan company Prolesa is set to distribute $5 million in economic surpluses among dairy farmers. Additionally, 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 was closed by Brazil, maintaining open access to the Brazilian market. Uruguayan President Yamandú Orsi praised the decision and the efforts of the Uruguayan Foreign Ministry.

Economic Impact

Uruguay has shown 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.

Technological Advancements

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.

Diversification of Export Markets

Uruguay has begun exporting dairy products to Indonesia, diversifying its export markets and facing competition from established suppliers. Uruguay's 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

The CNA led an anti-dumping investigation, revealing significant dumping margins for Uruguay. Despite this, political reasons have led to a temporary suspension of tariffs to avoid inflationary impacts and maintain Mercosur relations.

Modified: 2026/06/28