By the Blouin News Business staff

Uruguay to bail out diary industry, blaming Venezuela

by in Americas.

Source: R. Holstien/flickr

Source: R. Holstien/flickr

Uruguay’s dairy sector is in such severe crisis that the government announced an emergency bailout on Tuesday. The blame lies largely with deadbeat Venezuela. The two countries signed a deal in September for Venezuela to import 235,000 tons of Uruguayan milk, cheese, rice, soy, and poultry. But rather than a lump-sum payment of $267 million as Uruguayan agribusiness firms were expecting, Caracas only paid $50 million in November. And since then, Venezuela has taken delivery of $93 million more in food on good faith from Uruguayan producers but hasn’t paid anything more. Further shipments were halted, but there are no replacement buyers anywhere in the depressed industry.

The government finally intervened after dairy farmers protested and called for it to step in. Under the bailout, the four dairy firms that exported most of the powdered milk to Venezuela will receive $66 million in a loan with a three-year grace period on repayment and no subsequent interest charged. That might avert catastrophe, but there are other structural problems hamstringing the industry…

… the rest of this article lives on Blouin News. Read it here.