Colombian Dairy Sector Seeks Stability Amid Challenges
The Colombian dairy market is at a critical juncture, presenting both challenges and opportunities for the industry. After a year marked by uncertainty in 2024, producers are now facing price, production, and regulatory adjustments to achieve a sustainable recovery by 2025.
One notable factor for the sector is the projected 5% increase in milk collection in the first quarter of 2025 compared to the previous year's final quarter. Bancolombia's report suggests this rise could influence prices, with an estimated 18% increase. However, there is an expected 8-9% base price reduction in the second half of the year, impacting producers' profitability.
Economic incentives in the dairy industry depend on protein, fat, and total solids content. Additionally, sustainable production and CO₂ emission reduction have become crucial for accessing further bonuses.
The commercial front is thriving, with a 142% growth in dairy exports in 2024, reaching 12,328 tonnes. Milk powder led international sales, significantly aided by the commercial reopening with Venezuela, which absorbed 97.4% of Colombian milk powder. The United States has emerged as the main destination for yogurt exports, benefitting from the Free Trade Agreement (FTA).
Conversely, dairy product imports fell by 12.4%, with a 22.6% drop in milk powder purchases due to decreased domestic demand and a 10% price hike in U.S. milk powder. Tariffs applied from September 2024 to January 2025 also limited foreign product purchases.
A scandal has rocked the market wherein several dairy companies were fined a total of 21 billion pesos by Colombia’s Superintendence of Industry and Commerce for selling milk adulterated with prohibited lactosueros. Despite a 24% reduction in milk powder inventory, increased spray-drying capacity has facilitated surplus management and boosted exports.
Small and medium-sized producers face challenges accessing this infrastructure, limiting their market competitiveness. Maintaining high compositional and hygienic standards in milk, particularly in lowland tropics, remains a priority.
Domestic consumption of dairy products shows signs of recovery after declining since December 2022 due to easing consumer prices. However, a 12% reduction in voluntary bonuses paid by the industry to producers affects ranchers' incomes, potentially hindering long-term sector investment.
