2022 has been a tremendous success for farmland investors in Uruguay.
Land prices have risen sharply, up to over 25% in some of the best cropping
areas, and costs for agricultural commodities experienced a strong and
sustainable upward trend.
The first quarter of 2023 has predictably shown a continuation of strong demand
and stable prices, reflecting in strong land appreciation and higher cash returns
from crop and timber yields for investors across all agricultural sectors.
Due to global supply constraints, such as the conflict in Ukraine, and a general
global shortage in agricultural commodities and food products, we expect this
trend to continue. We have seen substantial investors and pension funds
engaging in bidding wars in face of diminishing availability of prime farmland
tracts in the most desirable locations, driving up prices sharply.
AGRICULTURE
Data from the Ministry of Livestock, Agriculture and Fisheries, Agricultural Statistics
Office, show it was one of the best years for winter agriculture, both in terms of the
number of hectares sown and yields obtained throughout 2022. This is due not only to
national reasons but also to other international factors, as Uruguay is, essentially, an
agro-exporting country.
There are three main extensive winter grain crops in Uruguay: wheat, barley and
canola. This winter, 861,000 hectares of these three crops were sown – a very good
sowing compared to historical averages.
This is mainly due to two factors: the Russo-Ukrainian war, which led to an increase in
the price of wheat on the international market; and the sustained higher yield of winter
crops, due, on the one hand, to the introduction of new genetics with a better degree of
adaptability to the environment and resilience to adverse climate conditions, and on the
other hand, to the development of new strategies in the use of fertilizers.
Canola
With 348,000 sown hectares, canola has positioned itself as the main winter crop, with
an average yield of around 1,800 kg per hectare.
This crop has only recently been introduced in Uruguay, so there is still much room for
improvement in terms of production. Nonetheless, this is the winter crop that every
producer should be focusing on: by combining proper production techniques and an
intelligent sales strategy, some producers have been able to equal or even surpass the
net profits of soybean, the summer crop that has maintained the highest profit margins
in the last few years.
Also, the use of canola oil continues to grow exponentially worldwide. This can be
explained by the global expansion of the middle class, especially in China, which uses
oil for consumption; and the increase in the use of oil as a substitute for fossil fuels –
thus showing that the rise in canola prices is not simply the result of a short-term or
conjunctural matter.
Wheat
A total of 301,850 hectares were sown, the largest wheat sown area in the country since
The average yield for the season was 4,251 kg per hectare, one of the highest in
recent years, in spite of the adverse climate conditions.
Barley
In the 2022 season, 211,000 hectares of barley were sown, with a yield of 4,252 kg per
hectare. The sowing area was lower than that of the previous harvest, in which 224,000
hectares were sown, but the high yields were maintained.
LIVESTOCK
Uruguayan cattle breeding is also another example of our agro-exporting country model.
Out of the total amount of meat produced, only about 15% is domestically consumed,
even though Uruguay is the country with the world’s highest beef consumption per
capita, with the remaining 85% being exported.
Last year ended with a record meat export turnover of US$ 3 billion, 80% of which
represented beef exports. Of this total, 56% was exported to China and the remaining
34% to the European Union and the United States.
2022 was also a good year for Uruguayan cattle breeders. The transfer of strong
international as well as domestic prices of steers and cows, led to one of the highest
returns in many years for livestock breeders.
FORESTRY
2023 got off to a positive start for forestry, with an investment of US$ 136 million for the
establishment of a wood panel manufacturing plant in the northeast of the country.
This year, new investments are expected on the part of forestry industries into this area
of the country where forestry is gaining ground, thus generating a much more dynamic
business environment.
CURRENT CLIMATE CONDITIONS
Uruguayan producers, as most of their worldwide counterparts, are currently facing an
adverse climatic situation: drought.
Uruguay however is one of the world’s countries with highest water reserves..(Faustino
can you add a little facts on how much water) and in addition, both the government and
banks have offered producers several financing tools to invest in water for animals and
irrigation systems for crops.
Although the consequences of this climatic episode are not yet clear, Uruguayan
producers are expected to be able to overcome it.
