Milk Industry in Uruguay 2012

July 2012

Dairy Industry Investment Opportunities in Uruguay

2

Executive summary

The dairy industry in Uruguay has been increasing its production and exports since 1975. It consists of two sub‐sectors: farming and industrial.

The farming sub sector is made up of milk producing dairy farms, basic raw material employs 24,000 people1 and due to innovation, technical and organizational changes, it has managed to increase its total and per hectare production during almost forty years, without increasing the occupied surface area.

This has been achieved on the basis of a grazing system, improving the animal feed, firstly reducing and then maintaining low the cost of milk liter. In this way, milk production volume has increased three‐fold, from 723 million of liters in 1975 to 2,201 million in 2011.

The government has supported the dairy industry by regulating the producer’s milk price during a certain period of time (in 1976 the industry milk price was deregulated followed by the quota milk price in 2008), whilst currently only the consumer milk price is established by the government. In addition, institutions which have performed and encouraged research have been supported by promoting International Treaties which have favored export and lately creating the National Milk Institute (INALE) in 2007, which articulates the interests of different players of the industry.

The early exhaustion of the domestic market enabled increasing surplus to be allocated to exports, having raw material processed in industrial plants led by Conaprole as well as in other national and foreign industries. Exports swelled five‐fold between 2001 and 2011, with main exports being of powdered milk, cheese and butter, followed by whey and long life milk.

Although exports are mainly bound to Brazil, Venezuela, Mexico and Cuba, the number of destinations has increased gradually ‐ Uruguayan dairy products reached over 65 countries in 2011.

The global rise in the price of raw material since approximately 2006/2007 has included dairy products, boosting new technological changes and offering new investment opportunities in the industry.

Three significant new ventures have recently set up operations in Uruguay, projecting increases in production and exports in the coming years.

1 Based on 2010 Agricultural Census.�

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1‐ Why invest in the dairy industry in Uruguay?

Uruguayan dairy production has many years of experience in the primary, industrial and service sector. The increase in dairy farm milk production has been steady since 1975 to date (June 2012), widely exceeding the requirements of a well supplied population and assigning constantly increasing volumes to export.

The primary sector has continuously been introducing technical progress, not only in pastures and other animal feed, but also in machinery and equipment, sanitation, herd management improvement, rationalization of production, etc. and learning to adjust its capabilities to the fluctuating conditions of the climate and market.

The industrial sector, integrated by a national cooperative company and with active participation of international and other national companies, has continuously expanded its installed capacity and supported the primary sector, collecting all milk production, diversifying its production in the internal market and exporting various products.

In Uruguay, foreign investors receive the same treatment as local investors. They are free to transfer funds and to repatriate profits.

Uruguay is a member of Mercosur, an enlarged market with more than 240 million inhabitants and almost 400 million including other South‐American countries with which the Mercosur has economic complementation agreements, such as Bolivia, Chile, Colombia, Ecuador, Peru and Venezuela.

Law 16,906 passed 20/Jan./1998 declared the promotion and protection of investments carried out by national and foreign investors in Uruguay to be of national interest. The admission regime and treatment of investments made by foreign investors shall be equivalent to that granted to national investors. Investments shall be admitted without

need for prior authorization or registration. The Government guarantees the free transfer of capital and profits, as well as other sums related to the investment, which will take place in freely convertible currency2. The law offered a series of tax benefits, which were regulated by Decree 455 of 26/Nov/2007 which allows the company, under certain conditions, to compute up to 100% of the investment amount as an Income Tax advance payment. Decree 002/012 of 9/Jan/2012 also introduced some special modifications.

There is also a beneficial regime for all exports, including:

Reimbursement of VAT paid when purchasing supplies,

A Temporary Admission regime for imports of materials which are included in the exported goods, so these do not pay taxes (customs and others),

An exports pre‐financing system,

National tax refund regime (2% in this case), Decree 558/94 of 21/Dec/94

The Uruguayan dairy industry is attracting substantial foreign investments, many of which are made in the primary sector (milk production), such as NZFSU, which sells to existing processing plants with capacity or capable of expanding their capacity, as well as in the

2 Law 16,906 of 20/Jan/1998, Articles 1, 2 and 5.�

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secondary and service sector (Schreiber, Grupo Gloria, Bulgheroni, etc.), all of these being part of full cycle projects with the raw material (milk): production of fodder and rations for internal use, powdered milk plants, cheese, etc. for export, and energy generation from animal and industrial waste (for internal and external use).

The prospects of improvement in the standard of living of many sectors of the world’s population and of the consequent consumption of milk, alongside the fact that Uruguay already has high consumption, allows for focus on export to markets that could become more and more exclusive, given our small size in the global demand.

The current but changing relationship of dairy favorable costs vs. its supplies requires the setup of plants with great activity management and planning capacity and the development of a qualified workforce, so as to maintain the company’s profit capacity optimized, taking advantage of the technical changes that are taking place in agriculture as well as in fertilizers and logistics.

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2 ‐ The global and Uruguayan dairy market

Dairy world production has risen by 14% during the 8 years between 2003 and 2011, at a cumulative annual rate of 1.9%, concentrated in only a few countries: half is produced between the European Union ‐27 and United States, and a third in India, Russia, China and Brazil (information provided in metric tons, 2011). The other countries only account for the remaining 18%. Refer to Annex 2 Table A1.

In Uruguay, growth has been even more significant: 52% between 2003 and 2011, at the annual cumulative rate of 6.2%, being surpassed only by China (Refer to annex 2, table A1). In fact, domestic milk production has been increasing since mid‐‘70s, gradually gearing towards the international market.

Chart 1 – Milk production in Uruguay (in millions of liters3)

Sources: 1975 to 1989: DIEA, Historic Series (Series históricas). 1990 to 2009: Idem. 2004 to 2010: DIEA, Dairy sector statistics 2010. 2011: Own estimate based on INALE, supply accounting for 84% of the production.

2.1 Ongoing increase in dairy production in the Uruguayan primary sector4

The first dairy production expansion in Uruguay took place between 1935 and 1955 (“1st Model: extensive pastures”), and was bound for the domestic market, in the context of an important increase in food consumption.

The expansion was due not only to the growth in the number of producers but also in the area devoted to dairy farms (Montevideo and South Basin: Canelones, Florida and San José). In 1936 Conaprole5 was founded as a cooperative open to all milk producers who wished to take part in it, for which they were only required to send milk regularly for its pasteurization and

3 It comprises commercial dairy farming (supply, property and direct selling and dairy farm consumption) and other consumption (farms without commercial dairy farming). 4 The main ideas expressed in this section and thereafter, up to 2000, are from Alfredo Hernández, Technological change in the construction process of competitive advantages in the dairy industry (El cambio técnico en el proceso de construcción de las ventajas competitivas en el sector lácteo) (1975/2000), School of Agronomy, University of the Republic, 2002. The five models are explained in Henry Durán (2004), The dairy path (El camino de la lechería), INIA Magazine no. 1, 12/2004.�5 Created by Law No. 9,526 of December 14, 1935.

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industrialization. The supply to the plant during this period accounted for approximately 30% of the production and consumption was concentrated in Montevideo.

“The reasons for the development of the system (in this age) are based on taking advantage of the good environmental conditions and natural resources available in the country for pasture‐fed livestock”6. However, the cost of production per liter of milk was high due to several

factors, such as the use of feed supplement (ration/concentrates) in many cases. Productivity per hectare remained stable around 732 liters (1936/68) per hectare per year, and the cost per liter remained at US$ 0.14.

The second expansion in production took place as from 1975 approximately and continues to this date (refer to Chart 1) and is based on dairy farm technological transformation.

“Due to the fact that it is a grazing‐based production system, whereby the main source of feed is the direct consumption of pasture by animals, the strategy has been to increase in different ways the availability of food, thus improving the individual efficiency of animals (more liters per animal) and simultaneously allowing for an increase in the allocation of animals per hectare… It is a process of sharp growth in the use of resources, based on generating an increase in the quantity and quality of the available food… The growth in productivity should be seen as the main outcome of an incremental adoption of technology.7

The first phase of expansion (“2nd model: improved pastures”) was accomplished through techniques brought from New Zealand for the improvement of pastures, which had been unsuccessful in Uruguay in the ‘60s with meat and wool livestock farming in which the natural field was used as the animals' feed base. In dairy farming, however, these techniques proved fruitful, they contributed to the reduction of ration consumption (which shrank from 300 to 130 grams per liter of milk) ‐ an expensive and required feed at several times of the year8. Productivity per hectare was now of 2000 liters/hectare and the cost per liter US$ 0.105.

At a later phase (“3rd model: organized”) pastures are complemented with storage of fodder reserves (silos) and strategic planning for land use, allowing to increase, without irrigation, fodder production, keeping the concentrate usage at low levels (110 grams per liter of milk). 3,100 liters/hectare were achieved and the cost dropped to US$ 0.09 per liter.

In the “4th model: controlled” the use of concentrates is resumed, simultaneously managing pastures, silage and ration, which is duplicated per cow. The allocation of cows per hectare increases and production soars to 4,700 liters/hectare. Unforeseen variations are controlled (climate effect) in the seasonal pasture supply. The cost per liter remains steady at US$ 0.09.

Finally, the “5th model: advanced”, implies “better exploitation of the genetic potential of the Uruguayan Holstein breed… by using larger quantities of concentrates and quality fodder reserves… up to a 30% of the yearly diet, obtaining with the same cow a significant increase in milk production (6,500 liters/hectare), keeping the cost of milk production per liter at values similar to the preceding models"9.

6 Alfredo Hernández, op.cit., p.15. 7 DIEA (8/2009), Milk production in Uruguay in 2007 (La producción lechera en el Uruguay año 2007).

8 Prairies based on legumes and phosphorous fertilizers are introduced into a 40% to 50% of the area (without defining rotation), with an increase of cow allocation per hectare. Henry Durán (2004). 9 Henry Durán (2004), op. Cit.�

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“The role of the technical change in dairy farms can be perceived as a path with growing difficulties in its successive stages and which have been dealt with in the adoption in many different speed and intensity levels”10.

In this path differences in productivity per hectare between different farms arise, with benefits for those of increased productivity: lower cost per liter of milk and higher profitability. Refer to Table 1.

Table 1‐ Uruguay, dairy farms’ annual performance indicators based on productivity level. Fiscal years 2000‐10

Indicator Dairy farms with an

average less than 2,200 liters/hectare

Dairy farms with an average over 2,200 liters/hectares

Liters/hectare/year 1,708 2,744

Total cost (US$/hectare) 225 327

Profitability (%) 4.9 6.6

Cost per liter (US$) 0.13 0.12

Source: A. A. Hernandez (2011), Dairy Industry (Sector Lechero), p.62, in M. Vasallo (publisher), Intra‐sectorial dynamic and competition in agriculture, Uruguay 2000‐2010 (Dinámica y competencia intrasectorial en el agro Uruguay 2000‐2010), School of Agronomy, University of the Republic.

Besides the deployment of pastures, in 1975 dairy farms started to introduce other innovations, such as: Improvements in the milking parlors and in the machinery and equipment (milking machines and cooling tanks, tractors), new herd management practices and breed improvements, as well as business management developments.

This process of introducing technological changes into dairy farms had three important outcomes:

1) Productivity increase per hectare which went from 731 liters per hectare in 1977 to 965 in 1987, 1,686 in 1997 and 2,370 in 2007.11 Refer to Chart 2.

10 A. Hernández (2011), Dairy Farm (Complejo Lechero), p.54, in M. Vasallo (publisher), Intra‐sectorial dynamic and competition in agriculture (Dinámica y competencia intrasectorial en el agro Uruguay 2000‐2010), School of Agronomy, University of the Republic.�11 DIEA (8/2009), Milk production in Uruguay in 2007, p.3. The years indicated correspond to 4 milk surveys

performed to this date.

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Chart 2 – Uruguay, evolution of dairy farm production per hectare Milk liters per hectare and per year

Source: MGAP‐DIEA. Milk surveys

2) Reduction of unit production cost per liter, which has evolved (in constant pesos) from a rate of 100 in 1970 to 37 in 200012 .

The costs per liter of milk in dollars were estimated at US$ 0.13 and US$ 0.14 in 1986 for farms with high and low level of technology13 and at US$ 0.119 (period 95/96) and US$ 0.127 (period 99/00)14.

An indicator of the Uruguayan low unit costs of milk is shown in the table below in which prices paid to producers in countries and regions of significance are outlined15

Table 2 ‐ Price of milk paid to producer per liter (1992)

Country US$/lt.

Japan 0.70

Italy 0.55

Denmark 0.41

EEC (average) 0.38

Spain 0.38

USA 0.29

Australia 0.23

Argentina 0.19

New Zealand 0.16

Uruguay 0.16Source: INALE

12 The data refers to the quota milk price paid to producer, which may be deemed representative of the average

production cost of the South Basin. A.Hernández (2002), op.cit. p.18.�13 A.Hernández (2002), op.cit., p.30, based on 1990 General Agricultural Census.

14 Idem p. 48, with data provided by a group of dairy farms which keep and analyze record files.

15 Idem, P.44 based on Australian Dairy Corporation (1993).

731

965

1.686

2.370

0

500

1000

1500

2000

2500

1977 1987 1997 2007

Lt/ha/year

9

3) Improvements in milk quality achieved by the total investments made, including milking equipment, feeding and animal sanitation, etc.

Other dairy farm features according to 2007 Milk Survey (latest survey performed) or 2000 Agricultural Census.

Decrease in number of dairy farms and industrial plant suppliers: it is one of the changes of the sector from 1975 to 2011, which led to more productive units (due to the increase in production and supply). In 1986 there were 7,335 dairy farms, while in 2011 there were 4,071. Of these, suppliers of industrial plants went from 7,278 to 3,278 in 2010. Refer to Chart A2 in Annex.

Size of farms and land possession. Farms between 50 and 199 hectares accounted for 50% of the total and 21% of the land; farms between 200 and 499 hectares accounted for 22% of the total and 26% of the land. At the higher end, those with 2,500 hectares and above accounted for 0.8% of the farms and 11% of the land. Refer to Chart A3 in Annex. Private area (owned by individuals or companies) accounted for 52%, leased area 38%, grazing 5% and other occupation forms 5%. Refer to chart A4 in Annex, with discrimination as per farm size.

Personnel employed. As of 2000, Hernández (2002), based on data from the 2000 Agricultural Census, states that “24,000 people worked on a permanent basis in the dairy sector,..., providing stability and employment to rural families”16. Employment level in the dairy sector is estimated in 18.8 permanent workers every 1,000 hectares17. According to this source, 50% of workers were made up of the producer and his/her family, the remaining 50% being represented by paid personnel. It is likely that currently (2012) the number of persons has decreased a little due to the fewer number of dairy farms (data from 2011 Agricultural Census still not available). Similarly, labor specialization must have increased due to the more rational management of dairy farms (animal diet preparation, product hygiene, rodeo handling, etc.).

Surface area dedicated to dairy. In 2000, milk production, which had covered an approximate surface of 1.1 million hectares until the end of the '90s18, has been decreasing, covering 1.0 millions in 2001, 960 thousand hectares in 2004, 874 thousand hectares in 2007 and 857 thousand hectares in 201019. Such information indicates that productive increase has not been achieved by moving land from other agricultural activities. However, this admits some relativization in the sense that agricultural land could be now indirectly used for the dairy industry, thus providing same with a larger number of fodders.

16 A.Hernández (2011), Dairy Farm (Complejo Lechero), p.54, in M. Vasallo (publisher), Intra‐sectorial dynamic and competence in agriculture, Uruguay 2000‐2010 (Dinámica y competencia intrasectorial en el agro Uruguay 2000‐2010), School of Agronomy, University of the Republic. 17 MAGP‐DIEA (2009), Milk production in Uruguay (La producción lechera en el Uruguay) (2007 Survey). 18 A. Hernández (2002), for 1991 1999, p. 45.

19 MGAP‐DIEA, 2010 Dairy Sector Statistics, p. 7.

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Recent evolution of dairy product export prices and unit cost of milk liter production: which model are we heading to?

As of the end of 2006 approximately, increases in international prices of primary products have become more noticeable. In the dairy sector, this entailed increases in export prices of its different products, which has consequences for producers through the prices the industries pay for their raw material, i.e., milk. At the same time, prices of supplies used by producers have increased, whether they are traded internationally or domestically (fuel, grains, ration, and fodder). Charts 3 to 5 and Table 2 provide data evidencing this new situation.

Chart 3 – Recent evolution of milk prices for producers per country Dollar cents per liter

Source: INALE

Chart 4 – Uruguay, evolution of dairy chain prices (US$/equivalent lt. of milk)

Source: INALE

0.19 0.21 0.24

0.27 0.26

0.35

0.48

0.30

0.41 0.48

0.11 0.13 0.150.17 0.17

0.26

0.35

0.23

0.32

0.41 0.29 0.27 0.30

0.37 0.37

0.42

0.59

0.50

0.56 0.64

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

US$/lt

Average export priceAverage price for producersAverage price in the domestic market

0.0

0.1

0.2

0.3

0.4

0.5

0.6

2006 2007 2008 2009 2010 2011

Europe N. Zealand Brazil Uruguay

11

Chart 5 – Uruguay, Average price for producer and milk liter unit cost

Source: MGAP‐OPYPA, 2011 Yearbook

For a sub‐group of dairy companies of CREA groups, the most recent relevant data on productivity and unit cost would be the following:

Table 3 – Uruguay, economic results of dairy companies from CREA groups

Indicator 2006/07 2007/08 2008/09 2009/10 2010/11

Productivity (lt/ha/year) 3,970 3,954 4,345 4,370 4,392

Gross Product (US$/ha) 895 1,546 1,214 1,297 1,712

Supplies (US$/ha) 677 1,040 1,106 997 1,324

Supplies/product ratio 0.76 0.67 0.91 0.77 0.77

Capital income (US$/ha) 218 506 108 300 388

Capital asset (US$/h) 3,748 5,143 5,698 6,136 7,832

Received price (US$/lt) 0.19 0.36 0.26 0.28 0.37

Unit cost (US$/lt) 0.14 0.25 0.27 0.21 0.28 Source: A. Hernández (2011), op. cit. p. 63 for 2006 to 2009, and CREA Groups for 2009 to 2011.

In this new setting, the core idea of the technological path undertaken in the Uruguayan dairy farms from 1975, which entailed an increase in milk production per hectare with a decrease and subsequent maintenance of milk liter unit cost can be changed.

Depending on the prevailing relation between the selling price and the cost, it could be convenient to increase production to a growing milk unit cost, as it has occurred from 2007 approximately.

If international prices (high) remained in time, maybe new production methods which change to some extent the technical path explained in paragraph 2 of this Report would be profitable, e.g. animal feeding in cowsheds (combined with different methods for obtaining food).

New ventures would be carried out in this sense. Please see Section 7.

0.130.15

0.190.23

0.20 0.20 0.210.19

0.220.260.17

0.28

0.390.37

0.200.22

0.30 0.32

0.390.42

0.00

0.05 0.10 0.15 0.20

0.25 0.30 0.35 0.40 0.45

02/07 08/07 02/08 08/08 02/09 08/09 02/10 08/10 02/11 08/11

US$/lt

Milk liter unit cost Average price for producers

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Evolution of land price and leases for agricultural purposes in Uruguay

Although we do not have land prices for different agricultural uses available, we do have information on prices from contracts of sale registered with the Registry Office of the Ministry of Education and Culture from 2000. According to such information, the average value of the hectare went from US$ 385 in 2002 (year of deep crisis) to US$ 3,196 in 2011. Refer to Chart 6 and Table A10 in Annex. The average land value in 2011 is eight times that of 2002.

For the indicated average of US$ 3,196 for the entire country, differences in values per department transacted in 2011 have ranged from US$ 1,461 (Artigas) to US$ 5,946 (Río Negro). The largest amount of land was transacted in Río Negro and San José20.

Agricultural land price has increased notoriously in Uruguay; however, it is way below international prices.

Regarding the price of annual hectare leasing, something similar occurred. Refer to Chart 7 and Table A11 in Annex.

Chart 6. Uruguay, evolution of land price for agricultural purposes US$ per hectare

Source: DIEA, based on data from MEC DGR

Chart 7. Uruguay, evolution of land leasing price for agricultural purposes. US$ per hectare Annual

3847

60

124

101

128

152

0

20

40

60

80

100

120

140

160

2005 2006 2007 2008 2009 2010 2011 Source: DIEA, based on data from MEC DGR.

20 MGAP‐DIEA (3/2012), On land price. 2011 Purchases.�

725

1,132

1,432

1,844

2,239

2,633

3,196

0

500

1,000

1,500

2,000

2,500

3,000

3,.500

2005 2006 2007 2008 2009 2010 2011

13

Refer to Annex 2, Table A11 for land leasing for agricultural purposes (including Dairy sector) per activity for 2011.

The highest leasing operations for agricultural use per hectare and per year were made in the Department of Colonia (US$ 227), followed by Canelones, Durazno and Flores (something more than US$ 170)21.

2‐ Support institutions and laws

Several institutions contributed to the promotion of the technological change in dairy farms:

the Agricultural Plan implemented by MGAP22, agricultural‐veterinary assistance services of Conaprole, Unidad de Lechería de La Estanzuela (government agricultural research entity) and the School of Agronomy. In 1989, the National Agricultural Research Institute (Instituto Nacional de Investigaciones Agrícolas ‐ INIA) was created, joined by La Estanzuela with a dairy unit23.

Furthermore, the Executive Branch officially fixed the milk price payable by industrial plants to producers24: quota milk and industry milk prices. The first one ‐ fixed on the basis of production costs in dairy farms and always above the second one ‐ provided the producer with a sustainable income and the population with the supply of fresh milk. Industry milk price was deregulated in 1976, thus being fixed by every industrializing company25. This system contributed to the explained evolution of total milk production between 1973/75 and in 1999/2000 it went from 723 to 1,400 million liters (refer to Chart 1), while the supply to industrial plants went from 225 to 1,100 million liters26.

Other initiatives have been supported by the state: “in November 2002, the Finance Fund for Dairy Activities was created by Law for the purposes of... financing milk production and servicing producers’ debts to BROU27 (following the crisis and devaluation of June 2002).

“In mid 2007, a new Finance Fund for Dairy Activity Sustainable Development took effect under Law No. 18,100, applying the good experience of the 2002 Fund”28.

“In 2007, consumption milk (“quota milk”) price, which was fixed by the Executive Branch, for the first time in 70 years was surpassed by the book value of the “industry milk” and both producers and industrial plants lost interest in the supply of the domestic market. …In March 2008, “quota

21 Visit MAGP‐DIEA’s Webpage, “Land Price” series, 2011 Leasing. 22 MGAP: Ministry of Livestock, Agriculture and Fisheries (Ministerio de Ganadería, Agricultura y Pesca). 23 www.inia.org.uy, National programmes.

24 It also fixed the selling price of the industries’ fresh milk to consumers.�25 Regulations regarding the reduction of import tariffs applicable to production machinery and equipment are also deemed important. 26 Quota milk remained around 200 million liters approximately.

27 A. Hernández (2011), op. cit. p. 64.


14

milk” was no longer priced by the Executive Branch and producers were free to fix their prices. Only fluid milk liter consumption is still officially priced”29.

The role of the State has had a positive influence on the sector’s competitiveness with measures such as: regulations on quota milk prices to producers, sanitary controls of dairy animals and dairy farm certificates, construction of appropriate roads for the transportation of supplies for production and milk for plants, rural electrification, research activities mentioned above in CIAAB/INIA, bilateral agreements with certain countries to make exports easier (CAUCE with Argentina and PEC with Brazil from the seventies, agreements with ALADI in 1980, Iran, Russia and, as of 1991, MERCOSUR, etc.), tariff reductions for machinery and equipment import.

Late in 2007 (Law 18,242 of 27/12/2007), the National Milk Institute (Instituto Nacional de la Leche ‐ INALE) was setup for the purposes of organizing and developing the whole milk chain process.

This new Institution is a non‐state public entity governed by private law and has the purpose of being the pivot of the public‐private network oriented towards the development of the dairy sector.

The INALE is not an Institution created for research or education purposes but, through precise suggestions or proposals brought forward by different players of the sector, it will articulate different national or foreign private or public organizations capable of providing the required services. It was created in order to have an entity that can forward to competent institutions the enquiries filed by the sector's players and it does not involve the unnecessary and costly service duplication30.

3‐ Industrial dairy sector and exports

From its legal inception in 1935, Conaprole has led the dairy growth process in Uruguay. In its first years, it assured producers the purchase of all the milk they could produce as well as supply to consumers. In 1978, Conaprole gathered 78% of milk supplied to industries through its several plants31.

The Executive Branch implemented a pricing system which entailed double prices payable to producers (quota milk and industry milk) and a pasteurized milk selling price to consumers. This measure seems to have efficiently contributed to the overall sector's growth. Companies contributed to dairy farm production increase by offering technical know‐how, investing in expansions of industrial plants and establishing new plants in the rest of the country, thus providing guarantees to producers.

The early exhaustion of the pasteurized milk domestic market, with a high consumption rate per person ‐ which already accounted for approximately 71 liters per year between 1977 and 2000 ‐ forced companies to diversify and differentiate their products in the domestic market and chiefly, to expand their exports. Low production cost in dairy farms was an important competitive advantage in an international market widely subsidized by European countries


30 Source: www.inale.org/Historia.�

31 Hernández, ob. cit. p. 11.

15

and USA, where increase in production was achieved without taking production costs into account, based on the supply of concentrates and supplements.

In the eighties, Europe, USA, New Zealand and Australia concentrated over 90% of exports, which only account for 5% of world production. In this setting, Uruguayan exports were a small portion of the total volume of exports and they were channeled to geographically nearby countries with preferential treaties, mainly Brazil.

In 1942 and thereafter, Uruguay began exporting dairy products in a steady growth process. In the second half of the nineties, exports exceeded US$ 100 millions and in the following years, they reached US$ 700 millions (2011). Refer to Chart 8.

Chart 8 – Uruguay, dairy product exports In millions of US$

Source: prepared by Uruguay XXI based on data from National Customs Office

“Availability of quality raw material in growing volumes... (was)... an initial requirement to design production and commercial strategies guaranteeing competitiveness conditions (to the industry)". Reduction in milk production costs through the introduction of technologies (in dairy farms) and the fact we were marginal exporters and price takers in the international market, “defined the way to export commodities, which are more homogeneous, less differentiated and with smaller margins (...)”32

In 2010, exports accounted for 60% of the dairy companies’ turnover and 68% of the volume (milk liters).33 Export percentage over the last 10 years has always exceeded 60% and in 2009 it was 84% (in liters)34. Refer to Chart 9.

32 Hernández (2002), ob. cit. p. 20.

33 INALE (2011), Uruguayan dairy sector (La lechería uruguaya).

34 A. Hernández (2011), p. 55. Source: DIEA.

130 124 135176

244 254

338

421368

523

696

0

100

200

300

400

500

600

700

800

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In millions of US$

16

Chart 9 – Uruguay, Dairy product sales in the domestic market and abroad 2010

Source: INALE (2011), Uruguayan dairy sector (La lechería uruguaya).

In the domestic market, the main product is the fluid milk. Refer to Chart 10.

Chart 10 – Uruguay, Dairy product sales in the domestic market ‐ 2010

Source: INALE (2011), Uruguayan dairy sector (La lechería uruguaya).

4.1 Exported products

The main exported products are powdered milk, whole milk or skim milk (45%), cheese (34%) and butter (10%). Furthermore, several types of whey (8%) as well as UHT Milk or long life milk (3%) are exported35. Refer to Charts 11 & 12.

35 2011 percentages, based on exported dollars. �

17

Chart 11 – Uruguay, dairy product exports Powdered milk, cheese and butter. In millions of US$


Chart 12 – Uruguay, dairy product exports UHT milk, long‐life milk and whey. In millions of US$


4.2 Export destination countries

Historically, export destination countries have been four: Brazil, Venezuela, Mexico and Cuba. In 2011, the first two countries accounted for 57% of export volume, almost in equal parts, Mexico 11% and Cuba 8%. Other export destination countries are Algeria, the Russian Federation, Argentina, China, the Philippines, South Korea, among others. Refer to Charts 13 & 14 and Annex, Table A5.

26

4 4 8

22

39

58

3748

55

010203040506070

2007 2008 2009 2010 2011

In millions of US$

UHT and long life milk whey, curd milk

128

176157

237

311

33 34 39 3771112

149130

194

236

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011

In millions of US$

Powdered milk Cheese Butter

18

Chart 13 – Uruguay, Dairy product exports per country ‐ 2011


Nowadays, exports are concentrated in a few countries but countries of destination have been diversified ranging from 24 countries in 2001 to 65 countries as from 2011.

Chart 14 – Number of countries to which Uruguay exports dairy products.

Source: prepared by Uruguay XXI based on data from

National Customs Office

4.3 Main exporting industrial companies

Historically, the main exporting company has been Conaprole, accounting for 59% of the total in 2011, followed by INLACSA SA and ECOLAT URUGUAY SA (10% and 8%, respectively), PILI SA (6%), PETRA SA (5%) and CÍA. LACTEA AGROPECUARIA (4%). In total, 15 companies exported in 2011. See Chart 15 and Annex, Tables A6.

130 244

696

24

6165

0

10

20

30

40

50

60

70

0

100 200 300 400 500 600 700 800

2001 2005 2011

Number of countries of

destination

In millions of

US$

Exports Number of countries of destination

25%

8%

11%

28%

29%

Other

Cuba

Mexico

Venezuela

Brazil

0% 5% 10% 15% 20% 25% 30% 35%

19

Chart 15 – Uruguay, Dairy product exports per company ‐ 2011

5%

6%

8%

10%

59%

0% 10% 20% 30% 40% 50% 60% 70%

PETRA S.A.

PILI S.A.

ECOLAT URUGUAY S.A.

INLACSA S.A.

CONAPROLE


By 2000, 20 companies were receiving milk, Conaprole concentrating 70% and the three largest companies 85%36. By 2010, 35 companies were part of the industrial stage, 13 exporting companies and Conaprole received 65% of the supply 37.

“Conaprole, with 76 years of history, 1,760 employees, 2,055 supplying producers and over 300 products, is the largest dairy company of Uruguay. It has 8 processing plants throughout the country and processes 1,000 million liters of milk per year”.

INDULACSA suggests that the industry’s growth potential will entail, almost exclusively, destining the largest production to external markets, whereby agreed mechanisms among the government, industries and producers should be created so that the opening of new markets turns into a viable and sustainable issue in the long term, adjusting internal production costs to the dynamic of international prices38.

Exports per product and destination country, % in dollars ‐ 2011 Refer to Annex 22, Table A7.

Powdered milk exports (MCN 0402) to Brazil (47%), Venezuela (21%) and Cuba (17%) concentrate 85% of the total volume of exports. Algeria also purchases 6% and the rest (9%) is distributed among several countries.

Cheese exports (MCN 0406) are also concentrated (85%) among three countries: Venezuela (52%), Mexico (17%) and Brazil (16%). The rest (15%) is distributed among other 7 countries.

Butter exports (MCN 0405) follow a rather different pattern: the Russian Federation purchased 33%, Algeria 16% and the rest is exported to several countries: Morocco, Mexico, Egypt, among others.

UHT and long‐life milk (MCN 0401) concentrates (86%) exports to Brazil (50%), South Africa (18%) and Venezuela (17%) and the rest is distributed among 5 countries.

36 Hernández (2002), ob. cit. p. 40.�

37 Hernández (2011), ob. cit. p. 40.�

38 Source: Communication notice of the Company by e‐mail of 3/Jul/2012.

20

Buttermilk and curd milk (MCN 0403) exports 81% to Mexico and the rest to 6 other countries.

Whey (MCN 0404) is exported to the Philippines (29%) and China (27%) and the rest to 7 countries.

Exports per product and company, % in dollars ‐ 2011 Refer to Annex 2, Tables A8 & A9. In the 6 analyzed products with 4 digits of Mercosur Common Nomenclature (MCN), Conaprole exports prevail.

Some interesting cases might be the following:

Cheese exports (MCN 0406) are very diversified among several companies: Petra SA and Pili SA export similar values to Conaprole (US$ 40 millions) and Coop. Agraria de Responsab. Ltda. exports a bit less (US$ 29:), Compañía Láctea Agrop. de Young (US$ 26 millions) and Ecolat (US$ 21 millions).

Powdered milk exports (MCN 0402), apart from Conaprole (US$ 282 millions) are led by Ecolat (US$ 23 million) and Inlacsa SA (US$ 6.4 millions).

Butter exports (MCN 0405) are carried out by Ecolat (US$11 millions) and Dulei (US$ 2.2 millions).

21

4‐ Recent ventures and new investment possibilities in Uruguay’s dairy sector

Below, three recent ventures in the dairy sector which reflect different investment possibilities within the sector in Uruguay are briefly described. There, internal feed production for dairy cattle is rationalized to make the most of the price/cost ratio, also including complementary investments which enhance efficiency and reduce costs. To what extent this modifies the technological path analyzed in Section 2 of this report is still under study, in particular due to the increase in commodities prices over the last five or six years.

Estancias del Lago 39

Primary, industrial and service production, with energy self‐sufficiency in the department of Durazno. The company is related to the businessman Alejandro Bulgheroni, who has already made several investments in Argentina and Uruguay.

The project is under construction. It covers 32,000 hectares ‐ some own and others leased – which will include a powdered milk plant for export, a dairy farm for the production of raw material (milk) through confined cows (animals are indoors, where they have their feed ration and from the stalls they go out to be milked), animal feed and fertilizer production and power generation for the entire project.

The dairy farm will have a final capacity for 8,800 milking cows and the industrial plant shall have a processing capacity of 310,000 liters of fluid milk per day in order to produce approximately 14,000 tons of powdered milk on an annual basis. Thus competition against the current plants, particularly Conaprole, for obtaining milk will be avoided40.

A unit will be built for the purposes of obtaining soy oil and produce 2,400 tons per year and 14,500 ton per year of expeller for animal feed. Oil will be used in part to produce fuel (biodiesel).

A biogas plant will process 640 tons daily of excreta which will feed a power generation unit of 1.6 MW (if necessary, biodiesel may be used).

It will also produce wheat and corn as feed supplement and it will be in charge of the rearing and re‐rearing of dairy cows.

Furthermore, a dam is envisaged in order to store water for irrigation and other uses in the facilities.

In the interview with the journalist, the company estimated that the employed staff will amount to 400 people and the annual turnover is estimated in US$ 60 million.

39 Source: EL País Agropecuario (February 29, 2012), p. 27 to 29.

40 The chosen area, in the Department of Durazno, is not part of the current milk producing region.

22

New Zealand Farming Systems Uruguay (NZFSU) 41

This New Zealand‐based venture began in 2006 with the purchase of lands already used for dairy establishments. After facing several problems, between 2010 and 2011 the Singapore‐based international group OLAM42 acquired a stake in the company by purchasing 86% of its shares and afterwards, it continued investing therein.

The purpose of the firm is to produce milk and this activity is carried out in 15,000 hectares43 distributed among 39 dairy farms in 4 Departments. It has 32,000 milking cows (they expect to have 49 dairy farms and 38,000 cows soon, until reaching 45,000 milking cows for the next summer). The ultimate objective is to produce 300 millions of milk liters per year.

The new strategy entails introducing high levels of food supplement, including fodder reserves (silage and bale) and, in particular, concentrates. The ideal diet is to cover 35% of the annual diet with concentrates – stated NZFSU’s CEO.

The project is based on irrigation, both of pastures and corn and sorghum. The strategy is focused on a correct combination of pastures and reserves. They expect to water 40‐50% of the milk producing area in order to improve the reliability of pastures and limit the impact of droughts.

Milk production is sold to Conaprole and for the time being, there are no plans to build processing plants. Nowadays, NZFSU is the largest milk producer of the country and accounts for 8% of the supply to industries.

Complejo El Talar44

This agro‐industrial establishment located in Laguna del Sauce, Maldonado, is associated with Juan Carlos López Mena, who has several investments mainly in Argentina and Uruguay (Buquebus, BQB Líneas Aéreas, etc.) and it was set up in 2010 near Punta del Este (Laguna del Diario) in Maldonado.

It includes milk production as well as dairy products. For such purposes, crops will be cultivated so they are used for cattle. The milking process is carried out in computerized rooms, allowing for monitoring of every cow's food as well as traceability of nutrients up to the final product. A differentiated cheese (Camembert, etc.) manufacturing plant under El Talar45 trademark has been established next to the dairy farm, connected by a lake‐duct, thus guaranteeing maximum sanitation throughout the process.

Soy crop will be destined for cattle food (80%) and to produce oil (18%), which at the same time will supply a biodiesel plant and this will be used in the facilities and in other companies of the group.

41 Source: EL País Agropecuario (February 29, 2012), p. 30 to 32. 42 The OLAM group manages supply chains of 20 agricultural products and food ingredients and is present in 65 countries. It quotes in Singapore Exchange, where it is headquartered. 43 Nowadays, NZFSU has 33,500 hectares, most of them owned by the company.

44 Video of 23/Apr/2011 on the interview made to López Mena by Héctor Huergo and A. F. Moujan, in a visit to the

farm. 45 Plant acquired in 2005 by López Mena and transferred to said facilities.

23

Efficiency and production enhancement are expected, lowering milk unit costs through the rational use of animal feed. At the time of the interview, the average productivity per cow was 31 liters per day from the 800 milking cows, but they expect to reach 42 liters.

Moreover, a biogas plant will be built which, by using cows’ excretion, will produce electricity for the facility. In a third stage, they are planning to build a solar energy plant in order to prepare the 50,000 roofed m2 to be finally arranged for heating water.

In the interview, López Mena emphasized the Government's support through the Investment Law.

24

ANNEXES

ANNEX 1

Agro‐industrial establishment link

The Uruguayan dairy sector growth is based on the link between raw material production in dairy farms and in the industrial sector.

In the 1935 ‐ 1975 period , “the possibility that every milk producer...can become a member of Conaprole, have access to an initial quota of 60 liters,... and that the cooperative be obliged to receive from the producer all of the milk it sends, had a direct effect on product attraction in new plants. As a result, producers felt supported and assured, thus contributing to create the conditions for the agricultural/industrial circuit". Such company had a leading role with a multi‐plant industrial outline (in 1978, it received 78% of the milk provided to industries)46.

ANNEX 2

Table A1 Annual production of milk per country, in thousands of tons ‐ 2005 to 2011

Country/Year % Growth

2005 2006 2007 2008 2009 2010 2011(*) 2011 rate

European Union 134,672 132,206 132,604 133,848 133,700 135,435 137,800 30.5% 0.3%

USA 80,255 82,455 84,211 86,174 85,881 87,461 88,950 19.7% 2.0%

India 37,520 41,000 42,890 44,500 48,160 50,300 52,500 11.6% 5.3%

Russia 32,000 31,100 32,200 32,500 32,600 31,900 31,800 7.0% ‐0.5%

China 27,534 31,934 35,252 34,300 28,445 29,300 30,700 6.8% 8.4%

Brazil 24,250 25,230 26,750 27,820 28,795 29,948 30,610 6.8% 4.3%

New Zealand 14,500 15,918 15,918 15,580 16,983 17,173 18,681 4.1% 3.8%

Mexico 9,855 10,051 10,657 10,907 10,866 11,033 10,878 2.4% 1.5%

Ukraine 13,423 12,890 11,997 11,524 11,370 10,977 10,800 2.4% ‐3.0%

Argentina 9,500 10,200 9,550 10,010 10,350 10,600 11,990 2.7% 6.0%

Australia 10,429 10,395 9,500 9,500 9,326 9,327 9,550 2.1% ‐1.5%

Canada 7,806 8,041 8,212 8,270 8,280 8,350 8,400 1.9% 1.2%

Japan 8,285 8,137 8,007 7,982 7,910 7,721 7,450 1.6% ‐1.7%

Sub total 410,029 419,557 427,748 432,915 432,666 439,525 450,109 1.9%

Uruguay 1,596 1,662 1,573 1,739 1,682 1,766 2,100 0.5% 6.2%

TOTAL 411,625 421,219 429,321 434,654 434,348 441,291 452,209 100.0% 1.9%

Source: INALE, based on USDA (United States Department of Agriculture) 2011(*): preliminary. From 2007 to 2011, data of Dec. 2011 were gathered from the USDA. For 2011, estimations were made on the basis

of data provided by INALE as of Nov. 2011. For Uruguay, data were gathered from DIEA, Statistics of the Dairy Sector 2010, Table 3.1, Commercial Dairy.

46 Hernández (2011), ob. cit. p. 11.

25

Table A2. Uruguay, number of dairy farms and industrial plant suppliers

Year Number of dairy farms

Number of suppliers

1985 7,102 7,071

1986 7,335 7,278

1987 7,228 6,720

1988 6,559 6,385

1989 6,684 6,093

1990 6,695 6,103

1991 6,516 5,932

1992 6,433 5,998

1993 6,327 5,672

1994 6,348 5,508

1995 6,033 4,959

1996 5,858 4,733

1997 5,709 4,500

1998 5,522 4,138

1999 5,286 4,028

2000 4,996 3,874

2001 5,125 3,895

2002 5,081 3,825

2003 4,919 3,594

2004 4,600 3,448

2005 4,500 3,312

2006 4,600 3,346

2007 4,600 3,403

2008 4,500 3,474

2009 4,200 3,371

2010 4,519 3,278

2011 4,071 Source: INALE based on information provided by DIEA and DICOSE

Table A3. Uruguay, number of dairy farms and surface, and farm size ‐ 2007

Farm size (ha)Number of farms in %

Area (ha) in %

Less than 50 15 2

50 ‐ 199 50 21

200 ‐ 499 22 26

500 ‐ 999 8 21

1000 ‐ 2499 4 19

2500 and more 1 11

Total 100 100 Source: MGAP‐DIEA. 2007 Dairy Survey.

26

Table A4. Uruguay, area used for dairy purposes per tenure system and farm size ‐ 2007

Farm size (ha) Own (%) Leased (%) Grazing (%) Other (%)

Less than 50 42 34 16 8

50 ‐ 199 45 36 11 8

200 ‐ 499 58 33 6 3

500 ‐ 999 45 48 4 4

1000 ‐ 2499 50 44 1 5

2500 and more 70 23 1 2

Total 52 38 5 5 Source: MGAP‐DIEA. 2007 Dairy Survey.

Table A5. Uruguay, Dairy exports per destination country In millions of dollars

Destination 2007 2008 2009 2010 2011 2011 %

Brazil 17 32 86 108 199 29%

Venezuela 51 149 73 164 197 28%

Mexico 99 92 68 63 73 11%

Cuba 35 51 20 35 53 8%

Algeria 11 3 11 32 31 4%

Russian Federation 21 10 4 17 24 3%

Argentina 4 2 3 13 12 2%

China 2 1 1 10 10 1%

Philippines 1 1 2 4 9 1%

South Korea 15 10 18 11 9 1%

Other 82 70 83 68 80 11%

Total 338 421 368 523 696 100%Source: prepared by Uruguay XXI based on data provided by the National Customs Office.

Table A6. Uruguay, dairy exports per company and year

In millions of dollars

Companies 2007 2008 2009 2010 2011 2011%

CONAPROLE 184 193 203 295 411 59%

INLACSA S.A. 34 58 37 51 69 10%

ECOLAT URUGUAY S.A. 42 55 28 34 58 8%

PILI S.A. 17 28 20 28 40 6%

PETRA S.A. 19 27 24 41 38 5%

COMPAÑIA L.A.L. DE YOUNG S.A. 10 17 14 17 31 4%

COOP. AGR. DE RESP. LTDA. 9 21 23 35 29 4%

DULEI S.A. 5 10 11 13 11 2%

CEREALIN S.A. 3 2 1 4 4 1%

LACTOS.A.N (URUGUAY) S.A. 5 4 2 2 3 0%

Other 9 7 4 2 4 1%

Total 338 421 368 523 696 100%Source: prepared by Uruguay XXI based on data provided by the National Customs Office.

27

Table A7. Uruguay, Exports per product and destination. Data in millions of US$ 0401- UHT milk, long-life milk

Destination 2007 2008 2009 2010 2011

Brazil 595 96 2,256 1,886 11,023

South Africa 3,304 365 276 1,979 4,080

Venezuela 914 450 2,121 3,855

Singapore 624 927 211 825 1,803

Vietnam 154 140 187 241 326

Taiwan 487 57 123 105 251

Philippines 45 136 217 109 201

Angola 198 425 183 136 45

Chile 772 283 12 33

Mexico 19,184 211

Other 433 314 389 226 541

Total 25,797 3,867 4,304 7,662 22,126

0402- Powdered, skim or whole milk

Destination 2007 2008 2009 2010 2011

Brazil 6,855 15,695 49,785 65,690 146,936

Venezuela 30,675 83,837 18,457 58,163 66,472

Cuba 31,885 48,911 17,747 34,354 52,667

Algeria 9,913 398 9,799 29,919 19,323

Singapore 930 1,060 749 5,122 3,029

México 10,360 3,911 13,945 2,875 2,673

Chile 1,945 13 5,836 960 1,297

Egypt 4,665 2,624 1,528 1,953 1,089

Nigeria 5,842 5,954 1,193 4,838 821

Senegal 5,210 5,198 13,406 3,027 563

Other 19,399 8,449 24,499 30,013 16,435

Total 127,682 176,050 156,944 236,913 311,305

0403 - Buttermilk, curdDestination 2007 2008 2009 2010 2011

Mexico 29,800 49,052 28,849 27,136 25,541

Montevideo Free Zone 3,223

Filipinas 150 35 132 353 1

Brazil 1,808 775 684

Singapore 278 613 355

Myanmar 97 147 113 430 290

Venezuela 480 1,168 108 1,763

Thailand 98 130

Other 146 294 434 34 0

Total 32,857 50,694 30,539 30,328 31,438

0404 – Whey

Destination 2007 2008 2009 2010 2011

Philippines 325 419 1,430 3,023 7,073

China 659 266 3,176 6,523

Vietnam 43 104 351 1,511 1,991

Singapore 309 0.2 215 967 1,608

Colombia 304 0.1 0.0 663 1,285

Brazil 3,096 4 3 6,797 1,281

Mexico 77 534 294

28

Other 1,693 1,359 102 1,444 3,810

Total 6,494 7,672 6,831 17,580 24,034

0405 - Butter

Destination 2007 2008 2009 2010 2011

Russian Federation 9 4 2 12 24

Algeria 1 3 1 2 12

Morocco 7 4 7 4 7

Mexico 3 7 4 5 6

Egypt 3 10 6 2 5

Venezuela 0 2 3 3

Turkey 3 1 1 0 2

Argentina 5 1

Brazil 0.1 2 8 2 1

Other 8 3 8 2 10

Total 33 34 39 37 71

0406 ‐Cheeses

Destination 2007 2008 2009 2010 2011

Venezuela 20,144 62,922 51,933 98,434 123,069

Mexico 36,403 31,735 20,467 27,376 39,548

Brazil 4,941 9,514 22,576 31,850 37,975

Argentina 2,550 1,998 1,498 7,549 10,824

United States of America 7,070 9,663 4,569 7,793 7,637

South Korea 15,316 10,142 18,037 10,244 4,345

Chile 5,132 3,391 3,526 3,161 2,916

Peru 879 2,243 1,299 1,611 1,027

Angola 1,193 2,237 1,399 962 798

Russian Federation 11,587 5,779 356 110

Other 6,832 9,611 4,694 4,543 8,290

Total 112,047 149,235 130,355 193,634 236,430

Table A8. Uruguay, Dairy exports per product and company. Data in millions of US$

0401- UHT milk, long-life milkCompany 2007 2008 2009 2010 2011

CONAPROLE 22,876 1,828 3,056 3,342 17,509

CEREALIN S.A. 2,875 2,039 1,227 4,063 4,500

SEGLAR S.A. 20 34 117

Other 47 0 1 223 1

Total 25,797 3,867 4,304 7,662 22,126

0402- Powder, skim or whole milkCompany 2007 2008 2009 2010 2011

CONAPROLE 89,499 125,138 131,094 215,689 282,099

ECOLAT URUGUAY S.A. 31,957 43,063 19,698 18,322 22,722

INLACSA S.A. 2,124 3,911 2,611 2,875 6,416

PETRA S.A. 565 1,441

LACTEOS DEL RIO DE LA PLATA S.A. 4,101 3,370 1,942 24

Other 0 3 158 3 68

Total 127,682 176,050 156,944 236,913 311,305

0403 - Buttermilk, curd

Company 2007 2008 2009 2010 2011

INLACSA S.A. 29,290 48,510 28,849 27,136 25,541

DULEI S.A. 481 1,305 108 1,763 3,223

29

CONAPROLE 3,087 879 1,530 1,429 2,556

ECOLAT URUGUAY S.A. 118

Other 0 0 53 0 0

Total 32,857 50,694 30,539 30,328 31,438

0404 – Whey

Company 2007 2008 2009 2010 2011

CONAPROLE 4,372 5,073 3,428 10,342 12,723

COMPAÑIA LACTEA AGROP. LECHEROS DE YOUNG S.A. 438 853 2,075 3,381 4,294

PILI S.A. 459 2,349 3,644

ECOLAT URUGUAY S.A. 1,233 1,012 831 1,388 2,195

BELFICOR SA 970

Other 450 396 5 120 209

Total 6,494 7,334 6,798 17,580 24,034

0405‐ Butter

Company 2007 2008 2009 2010 2011

CONAPROLE 30,544 29,839 36,479 28,663 56,492

ECOLAT URUGUAY S.A. 1,773 1,745 714 6,641 11,425

DULEI S.A. 45 229 1,053 1,079 2,233

COMPAÑIA LACTEA AGROP. LECHEROS DE YOUNG S.A. 46 616 64 95 446

PETRA S.A. 651 1,497 721 323

Other 128 390 205 0 485

Total 33,185 34,315 39,236 36,801 71,081

0406 ‐ Cheeses

Company 2007 2008 2009 2010 2011

CONAPROLE 33,696 30,419 26,932 35,824 39,550

PETRA S.A. 18,331 24,587 22,276 40,694 37,551

PILI S.A. 17,011 27,875 19,883 25,513 35,504

COOPERATIVA AGRARIA DE RESPONSABILIDAD LTDA. 9,173 21,307 22,887 35,351 28,861

COMPAÑIA LACTEA AGROP. LECHEROS DE YOUNG S.A. 9,202 15,615 11,688 13,970 25,870

Other 24,634 29,432 26,689 42,283 69,094

Total 112,047 149,235 130,355 193,634 236,430

Table A9. Uruguay, Dairy exports per company. Data in millions of US$ Company MCN MCN4 Description 2007 2008 2009 2010 2011

CONAPROLE

0402 Powdered, skim or whole milk 89,499 125,138 131,094 215,689 282,099

0405 Butter 30,544 29,839 36,479 28,663 56,492

0406 Cheeses 33,696 30,419 26,932 35,824 39,550

0401 UHT milk, long-life milk 22,876 1,828 3,056 3,342 17,509

0404 Whey 4,372 5,073 3,428 10,342 12,723

0403 Buttermilk, curd 3,087 879 1,530 1,429 2,556

Total 184,075 193,176 202,520 295,290 410,930

INLACSA S.A.

0406 Cheeses 2,890 5,013 5,398 20,468 36,739

0403 Buttermilk, curd 29,290 48,510 28,849 27,136 25,541


0404 Whey 131 138 5 47 85

0405 Butter 192 55 Total 34,434 57,764 36,918 50,526 68,781

ECOLAT URUGUAY


0406 Cheeses 7,359 8,980 7,222 7,357 21,433

30

S.A. 0405 Butter 1,773 1,745 714 6,641 11,425

0404 Whey 1,233 1,012 831 1,388 2,195

0403 Buttermilk, curd 118

Total 42,322 54,800 28,466 33,708 57,893

Company MCN MCN4 Description 2007 2008 2009 2010 2011

PILI S.A.

0406 Cheeses 17,011 27,875 19,883 25,513 35,504

0404 Whey 459 2,349 3,644

0405 Butter 128 198 150 485

Total 17,138 28,073 20,492 27,862 39,633

PETRA S.A.

0406 Cheeses and cottage cheese 18,331 24,587 22,276 40,694 37,551

0401 UHT milk, long-life milk 45

0405 Butter 651 1,497 721 323

0402 Powdered, skim or whole milk 565 1,441

0404 Whey 320 258 54

Total 19,346 26,907 24,438 41,070 37,551

C.L.A.L.D.Y. S.A.

0406 Cheeses 9,202 15,615 11,688 13,970 25,870

0404 Whey 438 853 2,075 3,381 4,294

0405 Butter 46 616 64 95 446

Total 9,686 17,084 13,826 17,445 30,610

COOPERATIVA AGRARIA DE RESP. LTDA

0406 Cheeses and cottage cheese 9,173 21,307 22,887 35,351 28,861

0404 Whey 19 123

Total 9,173 21,307 22,887 35,370 28,984

DULEI S.A.

0406 Cheeses 4,568 8,003 10,050 10,602 5,829

0403 Buttermilk, curd 481 1,305 108 1,763 3,223

0405 Butter 45 229 1,053 1,079 2,233

0402 Powdered, skim or whole milk 153 63

Total 5,094 9,537 11,363 13,443 11,348

CEREALIN S.A.

0401 UHT milk, long-life milk 2,875 2,039 1,227 4,063 4,500

Total 2,875 2,039 1,227 4,063 4,500

LACTOSAN S.A.

0406 Cheeses 4,763 3,554 1,568 2,202 2,658

Total 4,763 3,554 1,568 2,202 2,658

SEGLAR S.A.

0406 Cheeses 1,270 90 1,209 1,083 1,569

0401 UHT milk, long-life milk 20 34 117

0403 Buttermilk, curd 53 Total 1,270 90 1,283 1,116 1,687

BELFICOR SA 0404 Whey 970

Total 970

GRANJA POCHA S.A.

0406 Cheeses 1,011 723 834 470 453

Total 1,011 723 834 470 453

SABANAY S.A.

0406 Cheeses 289

Total 289

NATURALIA S.R.L.

0406 Cheeses 24 101 122

Total 24 101 122

NOREPLEND S.A.

0402 Powdered, skim or whole milk 3 5 3 5

0401 UHT milk, long-life milk 1 9 1

0403 Buttermilk, curd 0

Total 3 5 13 6

Other 6,874 6,440 2,324 238 1

Total 338,061 421,495 368,176 522,918 696,415

31

Table A10. Uruguay, Land sales for agriculture‐livestock use. Number of sales, area sold and value (per year).

Year Number of

sales

Area sold Value

Total (thousand

of ha)

Average per (ha)

Total transacted (millions of

US$)

Average transacted (thousands

per ha)

2005 2,872 846 295 613 725

2006 3,245 859 265 972 1,132

2007 3,277 676 206 968 1,432

2008 2,959 684 231 1,260 1,844

2009 1,847 323 175 853 2,239

2010 2,093 336 161 885 2,633

2011 2,288 354 155 1,130 3,196 Source: MGAP-DIEA based on information provided by the Registry Office, Ministry of Education and Culture.

Table A11. Uruguay, Land leasing for agriculture‐livestock use. Number of contracts, area leased and value (per destination). 2011

Leased surface Value

Purpose Number of contracts Total (ha)

Average per

contract (ha)

Total (thousands

of US$/year)

Average (US$/ha/year)

Cattle raising 1,109 403,657 364 25,088 62

Dry agriculture 697 231,226 332 73,356 317

Rice 98 46,723 477 6,039 129

Dairy 117 13,372 114 1,862 139

Afforestation 76 53,348 702 6,565 123

Agriculture/ cattle raising

476 140,061 294 22,842 163

Agriculture/ dairy 73 5,206 121 929 175Dairy/ cattle raising 23 2,725 118 279 102

Rice/ cattle raising 15 10,964 731 1,211 110

Other uses 18 2,227 124 199 89

Total 2,672 909,510 340 138,368 152

Source: MGAP-DIEA based on information provided by the Registry Office, Ministry of Education and Culture.

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Uruguay at a glance (2011)47

Official name Republic of Uruguay

Location South America, bordering Argentina and Brazil.

Capital city Montevideo

Surface area 176,215 km2. 95% of its territory is productive land fit for farming exploitation

Population (2011) 3.4 million

Population growth (2011) 0.40% (annual)

GDP per capita (2011) US$ 13,861

Currency Uruguayan peso ($)

Literacy index 98%

Life expectancy at birth 76 years

Form of government Democratic republic with presidential system

Political division 19 departments

Time zone GMT ‐ 03:00

Official language Spanish

Main economic indicators 2006‐2011

Indicators 2006 2007 2008 2009 2010 2011

GDP (Var % per year) 4.1% 6.5% 7.2% 2.4% 8.9% 5.7%

GDP (in millions of US$) 19,639 23,482 30,438 30,454 39,411 46,710

Population (in millions of people) 3.31 3.32 3.33 3.34 3.36 3.37

GDP per capita (US$) 5,925 7,064 9,129 9,104 11,741 13,861

Unemployment rate – Annual Average (% labor force) 10.9% 9.2% 7.7% 7.3% 6.8% 6.0%

Exchange Rate (UYU/USD, Annual Average) 24.0 23.4 20.9 22.6 20.06 19.31

Exchange Rate (Annual Average Variation) ‐1.6% ‐2.5% ‐10.7% 7.7% ‐11.1% ‐3.7%

Consumer Prices (Var % annually accumulated) 6.4% 8.5% 9.2% 5.9% 6.9% 8.6%

Exports of goods and services (in millions of US$) 5,787 6,933 9,372 8,637 10,606 12,746

Imports of goods and services (in millions of US$) 5,877 6,775 10,333 7.979 9,681 12,379

Commercial Surplus/Deficit (in millions of US$) ‐90 158 ‐961 658 925 367

Commercial Surplus/Deficit (% of GDP) ‐0.5% 0.7% ‐3.2% 2.2% 2.% 0.8%

Global Fiscal Result (% of GDP) ‐0.5% 0.0% ‐1.5% ‐1.7% ‐1.1% ‐0.9%

Capital gross formation (% of GDP) 19.4% 19.6% 22.3% 17.2% 17.9% 19.9%

Gross Debt (% of GDP) 69.2% 69.5% 54.3% 71.9% 58.4% 55.6%

Direct Foreign Investment (in millions of US$) 1,494 1,330 2,106 1,529 2,289 2,191

Direct Foreign Investment (% of GDP) 7.6% 5.7% 6.9% 5.0% 5.8% 4.7%

47 Sources: Data regarding GDP were taken from the IMF; data regarding foreign exchange, foreign direct

investment (FDI), exchange rates, International Reserves and External Debt were provided by BCU; population growth, literacy, unemployment and inflation rates were provided by the National Statistics Institute.

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Investor Services

About us

Uruguay XXI is the country’s investment and export promotion agency. Among other duties, Uruguay XXI provides free support to foreign investors, both to those who are in the process of assessing where to make their investments and those who are currently operating in Uruguay.

Our Services to Investors

Uruguay XXI is the first point of contact for foreign investors. Our services include:

Macroeconomic and industry information. Uruguay XXI regularly prepares reports on Uruguay and the various sectors of the economy.

Tailored information. We prepare customized information to answer specific questions, such as macroeconomic data, labor market information, tax and legal aspects, incentive programmes for investments, localization and costs.

Contact with key players. We provide contact with government agencies, industry players, financial institutions, R&D centers and prospective partners, among others.

Promotion. We promote investment opportunities at strategic events, business missions and round tables.

Facilitation of foreign investor visits, including arrangement of meetings with public authorities, suppliers, prospective partners and business chambers, among others.

Publication of investment opportunities. On our website, we periodically publish information on investment projects by state entities and private companies.

www.uruguayxxi.gub.uy

[email protected]

Milk Industry in Uruguay 2012

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Transcript of Milk Industry in Uruguay 2012