Uruguay's Dairy Sector Sees Economic Improvement and Rising Milk Production

In 2025, Uruguay's dairy sector saw an economic turnaround with reduced production costs and improved milk prices, according to a report by Inale. The average production cost was recorded at $0.33 per liter for the 2024/2025 period, dropping to $0.36 when including the opportunity cost of land and capital. This marks a 3% decrease from the previous period.

The price received by producers increased to $0.39 per liter, reflecting a 1% improvement. These changes led to a positive margin for the country's dairy farms. Key cost reductions in inputs such as seeds, fertilizers, machinery, and leases contributed to the sector's improved financial standing.

On the financial side, primary sector debt fell to $200 million by the end of 2025, down 14% from 2024, and significantly lower than the 2016 peak of $348 million. This decline indicates a continued trend of debt reduction, except for a brief spike in 2023 due to drought conditions.

Milk production reached a historic high of 2.212 billion liters in 2025, despite a shrinking dairy herd. The number of dairy cows decreased by 1% to 622,351 by July 2025, with a notable 5% drop in heifers. Exportation of heifers increased significantly, from 4,979 in 2024 to 13,958 in 2025.

The number of active dairy farms also declined, with 1,947 establishments reported by the end of 2025, a 4.7% decrease from the previous year. This indicates a trend towards greater industry concentration, as Uruguay produces more milk with fewer farms and animals, achieving higher efficiency.