Argentina's Dairy Sector Faces Crisis Amid Record Production

Argentina, a major milk producer in South America, is facing significant challenges in its dairy sector, despite reaching a record production level of 11.6 billion liters last year. This figure represents a 9.7% increase from the previous year, according to the National Dairy Directorate. However, the industry's profitability remains low due to rising input costs and limited access to financing.

Luciano Di Tella, director of the dairy company Yatasto, highlighted that while consumption patterns have shifted, overall consumption has not declined. More milk is being sold in cost-effective packaging, and sales of higher-value products have decreased. This shift has led to increased inventories and lower domestic prices, affecting profitability.

The dairy sector is concentrated in the Pampas region, comprising provinces like Santa Fe, Córdoba, and Buenos Aires. Despite the production boom, many companies, particularly mid-sized and regional firms, struggle with financial sustainability. The Argentine tax system, including municipal supply fees and gross receipts taxes, exacerbates these challenges.

Several plants have reduced or halted production due to these financial pressures. Some companies are contemplating restructuring into worker-run cooperatives, while others have ceased operations entirely. This downturn is also evident at the regional level, with Santa Fe province reporting a production decline of over 10% at the beginning of 2026.

Industry representatives urge the government to provide access to affordable credit for technological investments and address the complex tax environment. These measures are seen as crucial to ensuring the sector's long-term viability and preventing further closures.