One of Argentina's main dairy cooperatives will invest six million US dollars in setting up a plant in Uruguay, its first overseas experience.
The company from the rich dairy province of Santa Fe has been in Uruguay since March 2003 and "is not interested in competing in the local market but rather exporting taking advantage of Uruguay's international contacts", said company officials in Buenos Aires.
"Uruguay has bilateral trade agreements with strong buyers of dairy products such as Mexico and Venezuela", said Jorge Strika, Sancor's CEO, who added that "we might be involved with a local associate in the operation", but rejected the idea of buying an already established dairy plant.
"Another great advantage in Uruguay is that when exporting you don't have to pay special export duties such as happens in Argentina".
Sancor which recently signed a commercial agreement with New Zealand's Fonterra to jointly sell world wide powdered milk and certain types of cheese already operates in Uruguay with a daily production of 160,000 litres of milk. Sancor's production is equivalent to 7% of Uruguay's main cooperative, Conaprole.
Two thirds of Sancor's milk production goes into powdered milk and cheese for exports and the rest for distribution in Argentina.
Mr. Strika revealed that Sancor is planning to invest 20 million US dollars in 2005 to diversify markets and promote exports, of which Uruguay is the first experience.