Argentinian Dairy Producers Face Economic Challenges Amid Record Exports

Argentinian dairy producers are grappling with financial challenges despite a surge in exports and increased production. During the first quarter of the year, the average price for raw milk was ARS 514 per liter, which, in real terms, was 19% lower than the price recorded in the same period the previous year and below the historical average of the past two decades.

When adjusted to constant dollars, producers received an average of USD 0.35 per liter, marking a 22% decrease from the same period in 2025. This decline in prices has been ongoing with minimal interruption since mid-2024, significantly impacting producers' share of the final value of dairy products. In April, this share was only 23.2% of a dairy product basket's value, the lowest in the past decade and below the historical average of approximately 28%.

Data from OCLA-INTA highlights the repercussions of these economic conditions. In March, the average profitability of dairy farming was -0.9%, marking the fifth consecutive month of negative returns and the worst March performance in the last ten years.

Conversely, the export sector has seen improvements in its margins. For example, the gross export margin for whole milk powder averaged 22.7% during the first quarter, up from 13.2% the previous year.

Debt levels among dairy farms are also a concern. By the end of the first quarter, bank debt had reached ARS 478,401 million, roughly equivalent to the production of 970 million liters of milk. Additionally, credit irregularities have risen to 4.7%, more than twice the sector's historical average.

This situation creates a paradox for the Argentinian dairy industry: while production and exports are up, offering better commercial prospects for some parts of the supply chain, the primary producers of raw materials are facing increasingly complex economic conditions.