Argentina’s milk drop hits exports

Published 16 November 16

Argentina is one of the world’s major dairy exporting regions but its milk production has declined significantly during 2016. Deliveries this January to September were 11% down on last year, at around 6.8bn litres.

The drop is partly due to low global milk prices, pushing farmers to reduce concentrate feeding. An El Niño effect also led to extreme flooding in some of the main dairying regions, hampering milk production further. In addition, Argentina’s economy has had an effect, with currency devaluation making imported feed more costly and high inflation discouraging investment. The overall result has been a growing number of Argentinian producers leaving the industry.

With Argentina now just past its peak production month of October, manufacturing of its main dairy export, WMP, is likely to have been affected. WMP production is expected to fall by around 17% compared to 2015, leading to a reduction in export volumes, according to the USDA. Argentina’s annual WMP exports will have then fallen for five consecutive years.

However, even with this decline, Argentina looks likely to remain in the world’s top three WMP exporters, after New Zealand and the Netherlands. The next country behind Argentina is Uruguay, which would need to increase its WMP export volumes by more than a third in order to catch up.

Argentina 16Nov16

*2016 WMP export volume is a USDA forecast