Top Ten Reasons to consider Uruguay for Agribusiness/Contract Farming

• published: 24 Jul 2009
• views: 10040

- Outlines why Uruguay is a very attractive destination for foreign agribusiness investors, especially those from India Contact: info@alliedventure.com; www.alliedventure.com Target overseas clients: Govt. entities working on ensuring food security, farmers with big landholdings (individuals or groups), corporate houses with 'farm-to-fork' strategy/need to control supply chain, food processing companies, strategic private investors/agro investment funds, pension funds for forestry acquisitions. Top Ten Reasons for agribusiness investors to consider Uruguay 1. In Uruguay there are no restrictions on foreign ownership of farmland which is available in abundance ; the country has about 10% less land area than the Indian states of Gujarat/Karnataka. While Gujarat/Karnataka have population over 5 crores, Uruguay has population of just 35 lakhs - 70% of the population of Ahmedabad/or half the population of Bangalore. In Uruguay, there are 4 cows for each person, and each cow, on average, has 2 football fields worth of grazing area to itself!! Not surprisingly, dairy is a key export sector 2. Uruguay has clear land titles - all land is GPS mapped to high accuracy and all land records are in a transparent, public-access database. There is no problem with land squatters - with low population density of 6 persons per sq km outside main cities there are simply not enough people to cause such problems. All land transactions are in the free market - among private parties with no government involvement. 3. Plenty of land area is arable with huge future potential 1 million hectares currently under cultivation; 3 million more hectare of high potential farmland available', 9 million hectares of total potential farmland only 1/9 of that is being utilized. Main crops include soy, wheat, maize(corn) and sunflower; fruits are also grown. Farming is highly mechanized like in the US/Canada and farm sizes of 1000 hectares (2500 acres) can be operated by 3 to 4 people who are subcontracted, not on the farm company payroll. 4. Uruguay has almost ideal weather/soils for farming/forestry - subtropical/temperate year-round with no extremes of climate. Lies between 30 and 35 degrees South Latitudes.for e.g. in soy, Uruguay farmland has 3X productivity compared to India at a fraction of the cost. for e.g. in eucalyptus forest plantations, tree growth rates are some of the highest in the world 30-40 m3/hectare/year. 5. Uruguay is a fresh water paradise with a dense network of rivers, streams and lakes. No irrigation pumps are necessary for farming. Agriculture is rain-fed, it rains every 4 or 5 days throughout the year and ground water bubbles up right below the surface. Moreover, the northern part of the country sits on top of the Guarani Aquifer - the world's largest single groundwater reserve. The Yale University developed 2005 Environmental Sustainability Index ranked Uruguay Number 3 out of 146 countries - a countrys high score resulting from substantial natural resource endowments, low population density, and successful management of environment and development issues. US ranked #45 and India #101. 6. Uruguay is a democracy with no racial, religious or ethnic conflict. It was recently ranked #25 on the Global Peace Index - for comparison, the U.S. ranked #97 and India #122. 7. Uruguay has first world human development indicators - a skilled workforce with 98% literacy rate, and life expectancy at birth of 76 years. Tata Consultancy Services established its Latin American footprint here and employs 700 of the local workforce in the capital Montevideo. 8. By Uruguay national law, foreign investors are treated on parity with domestic investors. The country has a Bilateral Investment Promotion and Protection Agreement with India. The U.S. Department of Commerce considers it a safe country for investors. 9. There are no restrictions on bringing capital into the country or repatriating capital/dividends (the economy is dollarized, so hedging risk is straightforward, with the local currency - Uruguayan peso being fully convertible). Corporate taxes are 25% on profits (0% for forestry) and foreign personnel can obtain work permits/residency quite easily. 10. Uruguay has good banking infrastructure and sound legal system, that respects property rights and contracts - offering investors predictability. It has well developed logistics for grain transport. It offers market access to the Mercosur trade bloc of 250 million customers and a GDP of almost $2 trillion. In summary, Uruguay is country that offers value for money in agribusiness. Its economy, similar to New Zealand in its agro-based focus, offers agribusiness opportunities for investors, while offering the investor benefits like Mauritius and strict banking secrecy/political stability of Switzerland.