Brazil, a leading exporter in agricultural products such as coffee, soybeans and sugar, has emerged as one of the top importers of milk powder, as its dairy farmers, hampered by tight margins, fail to keep up with buoyant demand.

The South American country's imports of whole milk powder soared 35% to nearly 55,000 tonnes last year, data from Global Trade Information Services showed.

Imports at that level would see Brazil overtake Indonesia and Russia to become the world's third-ranked buyer of whole milk powder, behind China and Algeria, on US estimates.

For skim milk powder, Brazil's imports jumped 120% to more than 31,000 tonnes.

Imports, and curbs

The growing reliance on foreign supplies comes despite Brazilian efforts to discourage imports, through measures such as a quota of 3,300 tonnes a month on purchases of Argentine milk powder, and tougher licencing procedures on Uruguayan product too.

Even so Uruguay exported more than 17,500 tonnes of skim milk powder to Brazil last year, and Argentina some 33,000 tonnes of whole milk powder, with Chile another major supplier.

The US provided Brazil with a small quantity of skim milk powder imports, and larger shares of lactose and whey purchases.

Purchases were encouraged for much of the year by the strength of the Brazilian real.

Brazil's own dairy farmers have struggled against margins squeezed by high feed prices. Brazilian milk output fell 1.4%, year on year, in October – the 13^th successive month of contraction.

Thirst for milk

Meanwhile, demand is being spurred by growth in Brazil's urban population, expected by Euromonitor to expand by 11m between 2010 and 2015.

Urbanisation, bringing supermarkets and refrigerated distribution chains, is typically linked to growing dairy consumption.

Increasing wealth is also boosting consumption, with per capita spending on milk drinks alone expected to reach $67 by 2015, ahead of figures of $52 forecast for France and $45 for Germany.

'Imports likely to rise'

Rabobank analysts said last month that while they expected some recovery in domestic milk production early in 2012, "this will still be insufficient to keep up with local demand growth.

"With local wholesale prices likely to remain above world price levels, imports are likely to rise a little higher through the first half of 2012," the bank said.