Argentine dairy sector economic challenges

The Argentine dairy industry is facing significant financial and structural difficulties. In August, the sector recorded an estimated loss of $56,399 million. While milk production rose by 4.5% year-on-year to 7,515 million liters, a gap between production costs and producer prices created a deficit. The primary sector reported a negative result of $79,634 million, as the average price paid to producers was approximately $80 per liter below the reference price required to cover long-term costs.

Compounding these financial imbalances are high logistics expenses, which account for roughly 29% of total costs for dairy companies. These costs are reportedly 50% higher than domestic comparable networks and can double regional benchmarks due to infrastructure deficiencies, reliance on road transport, and the requirements of the cold chain.

Furthermore, a long-term contraction in domestic consumption has impacted efficiency. While dairy consumption has fallen by about 15% over the last decade, the volume of goods transported has decreased by approximately 35% over 15 years. This mismatch between logistics capacity and transport volume has led to higher per-unit costs due to underutilized capacity.