Uruguay's Dairy Sector Faces Transition Year Amid Global Price Recovery
Globally, dairy prices experienced moderate recovery in 2024, driven by supply shortages among major exporters. However, demand remained uneven, influenced by factors such as a strengthening U.S. dollar and economic slowdowns in key markets like China.
In this global context, Uruguay's dairy exports contracted by 2% in value, although export volumes increased slightly. Brazil and Algeria continued to be significant markets, with contrasting trends: Brazil's share declined, while Algeria's demand for whole milk powder surged.
Decline in Milk Production and Domestic Prices
Milk production in Uruguay fell by 4.6% in 2024, largely due to excessive rainfall in autumn that impacted herd comfort and productivity. However, reduced production costs helped mitigate the economic blow to farmers. By spring, milk deliveries to industrial plants showed signs of recovery, hinting at a more favorable year-end.
On the domestic front, the average sale price of dairy products dropped by 4.3%, mirroring declines in international markets and further straining producer revenues. Despite these setbacks, the industry has managed to maintain relative stability through cost adjustments and improved production efficiency.
Outlook for 2025: Signs of Recovery
Looking ahead, 2025 offers cautious optimism. Production levels are expected to recover, provided favorable weather conditions prevail. Globally, increased demand from Asia and other emerging regions could open new opportunities for Uruguay’s dairy exports.
Nevertheless, the sector faces structural challenges, including climate change, environmental regulations, and competition from alternative products. To solidify its position in the global market, Uruguay must balance sustainability and competitiveness. The path to robust recovery will depend on the industry's ability to innovate and adapt to an increasingly complex environment.
These insights are based on the 2024 Annual Report by the Office of Agricultural Programming and Policy (OPYPA), authored by Natalia Barboza. The report provides a comprehensive analysis of Uruguay's dairy chain, integrating data from key organizations such as INALE, the Central Bank of Uruguay, and international references.
