Uruguayans are well known for their passion for beef and soccer. Beef consumption per head is about 100kg per year and they regularly brag about winning two soccer world cups.

However, this relatively small country in South America is also becoming noticed as a potential competitor of the world market for dairy products.

Uruguay is twice the size of Ireland, with an area of 176,220km2. It nestles between Argentina and Brazil, with 3.5m inhabitants and a mild climate which is very favourable for growing grass. However, only about 5% of its area is used for dairying (see Figure 2).

Due to its location the equator, the four seasons are well differentiated. Mean temperature is about 17.5°C. Despite an annual average rainfall of 1,000mm, summer droughts are very frequent and almost every winter is wet. This and the predominant clay soils mean that farming in Uruguay can be a tough job, with very variable yields of grass and crops.

Uruguay dairy – the background

Uruguayan farmers compete with dairy products on the world market. Similar to Ireland, the vast majority of product is exported. About 70% of their production is being exported (28% Brazil, 21% Venezuela, 8% Russia, 11% Mexico, 12% Algiers). Farmers produce with no subsidies but production is rising and forecasts expect production for the second decade of this millennium to be 50% higher than in the first decade.

The number of farms is declining at a slow rate. In 2006, there were 4,600 dairy farms and this had declined to 4,400 by 2014. However, the number of dairy cows increased in the same period from 743,000 to 773,000, a rise of 30,000 cows yet a decline of 200 farms. Milk yield per cow is increasing and the most recent statistics show average milk per lactation at 5,270 litres in 2014.

Over the last decade, Uruguay has doubled its national production. This was done mainly by increasing milk yield per cow and taking advantage of higher milk prices and cheap grain.

As the predominant cow is a high genetic merit North American breed, farmers found great responses to increasing concentrates and went from feeding 400kg to 1,800kg of concentrates per hectare each year. Feeding practices have been improving on farms in terms of the composition of the diets, and also in terms of infrastructure for getting more from grazed grass. Both have helped increase milk yield per cow.

According to Conaprole (the main milk processor in Uruguay), the proportion of grass in the diet is steady at around 50%, with silage and concentrates comprising 23% and 27% respectively.

Grasses are mainly annual ryegrass, fescue and lucerns, with average pasture production about 10 t DM/ha/year, with a high level of variability. Peak growth is normally around 50kg DM/ha per day, with much lower levels in winter of around 15kg DM/ha per day.

Change of focus

The recent turndown in milk prices has left Uruguayan farmers struggling in terms of profitability. Some farmers have accumulated large amounts of debt and have been producing below the cost of production. The big focus over here is now to focus on feeding grass.

Land prices increased fourfold between the years 2000 and 2012. Nevertheless, dairy farms did not become more competitive in the use of land. Even farmers who have access to the best advice and consultancy services were not able to utilise more than 3.2t of grass dry matter per hectare per year.

There are some commercial farms harvesting 9t of grass DM /ha/per year, so they set the bar for best practice and performance.

Stocking rate overall is still very low. Industry statistics suggest in 2014 there were 4,341 dairy farmers with an average of 74 cows per farm stocked at about one cow/ha. Table 2 shows the performance on top farms and this shows the potential of the industry and where dairy farmers in Uruguay are really going.

What are the main challenges?

While it is clear that Uruguayan farmers need to focus on grazing more grass and reducing the cost of production, this is a cultural change that will take time and effort. New skills and technologies will have to be developed to manage pasture in this unique climate of frequent summer droughts and wet conditions in winter.

Currently, the predominant cow type probably doesn’t fit the pasture-based system towards which the industry seems to be heading. This can only be tackled by researchers and farmers working to set their genetic goals with a long-term view.

For a country with a high priority on exports, special attention will have to be paid to environmental issues. The critical points appear to be soil erosion, run-off phosphorus contamination and nutrient balances.

In terms of social sustainability, it seems that nothing can stop the concentration process – ie, fewer farms with larger herds. However, this needs to be accompanied by an upsizing of infrastructure and automation for the new generation to find any interest in milking cows.

  • Uruguay is quickly becoming a player on global dairy markets.
  • Similar to Ireland, most of the dairy product is exported out of Uruguay.
  • Production per cow has increased during the last 15 years because of higher milk prices and cheaper grain.
  • Given recent milk prices, the industry is turning back to grass in an effort to reduce costs.