Capture Value in Uruguay, a Rising Ag Star

Carlos Horovitz

The Uruguayan agricultural sector has experienced an important expansion in the last decade, and what many would call a boom in the last few years. This rise has been fueled by dramatically increased soybean plantings, according to Carlos Horovitz, director of Agritec S.A., a full-service agricultural input company with headquarters in Montevideo, Uruguay’s capital city. The country’s soybean acreage has soared from just 79,000 hectares in 2003 to almost 1.3 million hectares today.

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The 2012 big picture numbers clearly show Uruguayan ag is flourishing. For the first time in the country’s history, agriculture surpassed cattle ranching as the top export sector, totaling $2.6 billion in export volume (rain-fed crops and rice), of which soybeans contributed $1.4 billion. The results expected for the current crop cycle are also exceptional, with production of about 3 million metric tons of soybeans, expected to generate some $1.5 billion of income for the country.

According to Horovitz, strong commodity prices, a stable economic and judicial system and clear “rules of the game” have boosted the development of an investment platform for this unprecedented expansion, which features many Argentine farmers who rent land, especially in the western part of the country. The private sector has made investments in services, transportation and logistics to prop up agricultural development, thus assuring sustainability for Uruguay’s ag growth in the short, medium and long term.

There is room, however, to expand the country’s agricultural industrialization to capture even more value. Investment in infrastructure for oil extraction seems to be the next profitable step, Horovitz adds.

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Despite the positive growth, there is still room for improvement. For example, transportation and logistics need to be improved in order to increase efficiency and reduce costs. A solid rail system needs to be established.  
According to Horovitz, “Transport costs are the real obstacle to agricultural growth, especially in those regions located farthest from the loading ports.”

He says that the pace of the current growth in the Uruguayan ag sector will not in any way be slowed down by the implementation of new legislation related to agricultural land use (Plan de Uso y Manejo del Suelo). All parties involved are committed to working together in an effort to support conservation efforts and best practices to sustain agricultural development.

Real growth in Uruguayan agriculture, different from the “mini booms” of the past, is here to stay. The country is well on its way toward the next summer campaign, where soybean plantings are again expected to be the big news. Barring any major downturn in international commodity prices, or the need to add more acreage of summer season grasses, sorghum and corn in order to obtain more conservation-friendly crop rotations, Uruguay could see yet another record soybean crop.

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