The Outlook of Colombia's Dairy Business and the Impact of the FTA with the United States
The Colombian government, under President Gustavo Petro, has prioritized the agricultural sector, with dairy farming being a crucial area for the country's rural development and long-term growth. Recent statistics from DANE reveal a 142% increase in dairy product exports in 2024. Colombia exported 12,328 tons of dairy products, with powdered milk, whey, and yogurt being the main products.
Trade Relations
The reopening of commercial relations with Venezuela made it the primary destination for Colombian powdered milk and whey, while the United States received 73% of Colombian yogurt exports, capitalizing on the preferential access provided by the free trade agreement (FTA).
Import and Export Dynamics
Despite these positive trends, Colombia's dairy imports have decreased since 2023, registering a -0.5% fall in 2023 and a -12.4% decrease in 2024. The decline is attributed to a reduction in purchases of powdered milk and whey from key suppliers like the U.S., Chile, Bolivia, France, and Argentina.
On the other hand, cheese imports rose by 22.2%, milk protein concentrates by 46%, and yogurt by 64%, predominantly from the United States, even with FTA tariffs.
2025 Projections for Dairy Farmers
The report highlights that the compulsory minimum price for milk increased across regions in 2024, bolstered by improvements in its calculative components. Key quality improvements were noted in the high tropical areas, especially in Valle, Cundinamarca, Nariño, and Boyacá.
However, the Atlantic region continues to face persistent challenges in meeting hygienic standards, despite leading in the increase of fat content and total solids. A reduction in dealer bonuses since December 2022 helped address consumer price inflation, though it affected milk producers' revenues.
Bancolombia forecasts a moderate increase in milk collections this year, driven by a gradual recovery in consumption and potentially less severe climatic impacts.
Price Dynamics
A projected 5% increase in collections is expected for the first quarter compared to the last quarter of 2024, with an 18% price rise. Further into the year, collections may grow another 6%, while prices could decrease by 8%-9%. In the final quarter, collections might drop by 5%, and prices are anticipated to rise by 2%.
Overall, an annual growth of 0.2% in collections and a 4.9% increase in the base price are anticipated, contingent on compositional, sanitary, and hygienic quality improvements, to secure bonuses.
