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Terramar Christies- Farmlands in Uruguay
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COUNTRY PROFILE Official Name: República Oriental del Uruguay
Total Area: 176,215 km2
Political Division: 19 Provinces
National Capital: Montevideo
Location: South America bordering Argentina & Brazil
Government: Democratic Republic with Presidential system
Legal System: written laws based on Constitution
Currency: Uruguayan Peso (21 U.Pesos for U$S 1)
Official Language: Spanish
Business Languages: Spanish, English, Portuguese
Races: White 88% (European ascendants); Black 8% (Afroamericans); Natives 4% (from Charrua ascendants)
Religions: No official religion (Catholics 56%, non religious 38 %, Protestants 2 %, Jews 2%)
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SOCIAL INDICATORS Population: 3,4M (2011)
Annual Demographic Growth Rate: 0,4% (2011)
Density (pop/km2): 18,8
Life Expectancy at Birth: 76,4 years (2011)
Infant Mortality Rate: 7,7/1000
Literacy Rate: 98%
Incidence of Indigence: 0,5 (2011)
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SOCIAL INDICATORS Total Homes with pipe water: 96.1%
Total Homes with electric power: 98.5%
Fixed teledensity (fixed lines per 100 inhabitants, 2011): 28.6
Mobile teledensity (mobile services every 100 inhabitants, 2011): 136.3
PC penetration in homes: 69% (2010)
Internet Users (per 100 inhabitants, 2010): 58
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CLIMATE Temperate & pleasant through the year with no regional variations
Average Rainfall: 1000-1400mm (no rainy season)
Average Temperatures: Spring 17°C; Summer 25°C; Autumn 18°C, Winter 12°C
Winds: most frequent NE 15km/h & Cool SW
Relative Moisture: average 70-75%
Sun hours annual: 2400-2600
Snowstorms & Hurricanes unknown
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TOPOGRAPHY Transition from Pampas plains and hilly uplands of Brazil
Mostly gently rolling plains (fertile)
Low hills SE & NE (h. point 512m)
Fertile coastland lowlands
Earthquakes unknown
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HYDROGRAPHY & WATER RESOURCES Water-rich land
Prominent bodies of water mark S, W & E limits
Numerous lakes & lagoons
Three systems of rivers draining (Uruguay, De la Plata & Atlantic Ocean)
4 significant aquifers (part of the Guaraní aquifer 45000km2 only in Uruguay)
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MACROECONOMIC INDICATORS (2011) Natural Resources: fertile arable land, minor minerals, hydro-power
(75% of the country´s requirements) & fisheries (no oil or natural gas reserves so far)
GDP: U$S 46710 M
GDP per capita: U$S 13861
Annual GDP Growth Rate: 5.7%
Annual Inflation Rate: 8.6%
Unemployment Rate: 6%
Exports (U$S Millions) goods & services: 12746
Imports (U$S Millions) goods & services: 12379
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www.terramar.com.uy
Trade Surplus/Deficit (U$S Millions): 367
Gross National Debt (as a % of GDP): 55.6%
Foreign Direct Investment (U$S Millions): 2191
Sustained Economic Growth: 9 years growing at 5.3% average
Estimated Growth for 2012: 4%
GDP per capita tripled in last 7 years
Foreign Direct Investment tripled in last 6 years (4.7% of GDP)
Uruguay one of the major recipients for foreign investment in SA
MACROECONOMIC INDICATORS (2011)
EXTERNAL SECTOR Dinamic & growing external sector
Diversified products, services & markets
Uruguay exports to over 160 different destinations
Main Export Goods: meat, soybeans, cereals, dairy products, skins & leather, wood & articles, wool
Main Services Exported: tourism, transportation, corporate, information technology, financial
Main Partners: Brazil, USA, Argentina, Mexico, Germany, China, Spain
Main Import Goods: Machinery & mechanical appliances, fuel, oil, vehicles, electrical machinery & equipment, plastics, fertilizers
Main Partners: Brazil, Argentina, USA, China, Russia, Germany
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LOGISTICS, INFRASTRUCTURE & COMMUNICATIONS Privileged strategic location by the Rio de la Plata where the Parana & Uruguay river empty into the Atlantic Ocean
Ideal location & infrastructure to stock and distribute goods to the richest region in South America
New modern airport, only deep harbours in SA that operate under Free Port regime
Montevideo port is a regional hub for the Southern Cone and has world class facilities
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LOGISTICS, INFRASTRUCTURE & COMMUNICATIONS Uruguay´s road network is the densest in SA
Uruguay ranks 2nd in SA in roads´quality (Global Competitiveness Report 2012, World Economic Forum)
Uruguay is the most advanced country in Latin America according to the Index of Development of Information and Communication Technologies (ICT, 2011)
Highest mobile phone teledensity in Latin America
Highest rate of Internet users in Latin America
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INSTITUTIONS: STABILITY & SAFETY High reputation for stable and comprehensive legal framework
Respect for Property Rights & Contracts
Highly stable and solid institutional framework
Legislative and Executive powers operate properly
Judicial institutions operate independently
Top rankings in political & economic stability
Top rankings in transparency and lack of corruption
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BUSINESS FRIENDLYINVESTMENT ENCOURAGING POLICIES
Equal conditions for domestic and foreign investors
No restrictions when transferring capital into, or out of the country (dividends repatriation); no limitations to ownership by foreign buyers
Free Exchange rate market (no government intervention on price regulations); Investments can be done in any currency
Banking & taxing secrecy protected by law
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BUSINESS FRIENDLYINVESTMENT ENCOURAGING POLICIES
Solid finance market strong presence of international banking controlled by the Central Bank of Uruguay
Investment Promotion regime established by National Law N° 16906
National Law Nº16906: domestic & foreign investment is declared of national interest
National Law Nº16906: significant tax benefits as the exoneration of Income Tax for maximum amounts and timeframes depending on the kind of project
Uruguay recovers Investment Grade (Standard & Poor´s – April 2012; Moody´s – July 2012)
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URUGUAY: INTERNATIONAL RANKINGS 1st in Latin America in Political Stability (2010), World Bank´s Worldwide Governance Indicators
1st in Latin America in Democracy Index (2011), The Economist Intelligence Unit
1st in Latin America in Public trust of politicians (2012), World Economic Forum
1st in Latin America in Global Peace Index (2012), Institute for Economics & Peace
1st in Latin America in the Legatum Prosperity Index (2011)
2nd in Latin America in Judicial Independence (2012), World Economic Forum
2nd in Latin America in Corruption Perception (2011), Transparency International
Uruguay has the lowest incidence of crime and violence in business in SA (2012), World Economic Forum
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PRIMARY PRODUCTION Climate, topography, non degraded fertile soils, water abundance
Ideal conditions for efficient / intensive grazing & cropping systems
USE OF SOILS
Total Productive Area: 17M ha.
Grazing: 15,300,000ha.
Cropping: 1,200,000ha.
Forestry: 750,000ha.
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TYPE OF FARMLANDS IN URUGUAY AGRICULTURE (cropping: Soya/Maize/Wheat/Barley/Rice, etc)
GRAZING (Beef, Sheep, Dairy Systems)
FORESTRY (Eucaliptus, Pine trees, etc)
HORTICULTURE, VINEYARDS & OLIVES
LAND FOR REAL ESTATE DEVELOPMENT (coastal, lifestyle, recreation & tourism)
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SOME INDICATORS (2011) Nº OF BEEF CATTLE HEADS: 11M
Nº OF SHEEP CATTLE HEADS: 7.4M
Nº OF DAIRY CATTLE HEADS: 700,000
STAR SUMMER CROP: SOYBEANS (869,000HAS PLANTED)
STAR WINTER CROP: WHEAT (593,400HAS PLANTED)
FORESTRY: 650,000HAS OF EUCALIPTUS
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MAIN AGRIBUSINESS CHAINS: MEAT INDUSTRY GROWING VERTICAL INTEGRATION (big players own land, breeding/finishing systems & freezing works)
OVER 40 OPERATORS EXPORTING, TOP 10 ACCOUNTABLE FOR OVER 70% OF TOTAL EXPORTS
OVER 50% OF TOTAL PRODUCTION IS EXPORTED
HIGH QUALITY STANDARDS (high end markets USA, Canada, EU)
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MAIN AGRIBUSINESS CHAINS: DAIRY INDUSTRY CONAPROLE (COOPERATIVE) ACCOUNTABLE FOR 60% OF PRODUCTION
SEVERAL NEW PLAYERS ENTERING THE MARKET
OVER 60% OF TOTAL PRODUCTION IS EXPORTED (BEING POWDER MILK & CHEESE ACCOUNTABLE FOR 70% OF TOTAL)
HIGH QUALITY STANDARDS
MAIN MARKETS: MEXICO, VENEZUELA, BRAZIL, CHILE, ARGENTINA, RUSSIA
MAIN AGRIBUSINESS CHAINS: CROPPING INDUSTRY HIGHEST GROWING RATES IN LAST YEARS
DRIVEN BY INCREASING GLOBAL DEMAND & HIGH PRICES INTERNATIONL CROPPING POOLS OPERATING IN URUGUAY
SOYBEANS & WHEAT ARE THE STAR CROPS
OVER 60% FOR EXPORT MARKETS (CHINA, ARGENTINA, BRAZIL)
MOSTLY AS CRUDE GRAIN (LITTLE ADDED VALUE) WITH SOME EXCEPTIONS (MALTING BARLEY & RICE CHAINS)
MAIN AGRIBUSINESS CHAINS: FORESTRY INDUSTRY HIGHLY INTEGRATED
MULTINATIONAL CORPORATIONS OWN LAND, PLANTATIONS & NEW HIGH TECHNOLOGY PULP MILLS
OVER 70% OF PRODUCTION FOR EXPORT (MAINLY AS WOOD ROLLS FOR PULP INDUSTRY)
MARKETS: NORWAY, FINLAND, PORTUGAL, SPAIN, JAPAN, USA, SWEDEN
MOST OF THE EXPORTS USED TO BE AS NON TREATED WOOD
NEW MILLS STARTING TO ADD SIGNIFICANT VALUE TO THE CHAIN (FIRST PULP EXPORTS DONE IN 2008)
AGRIBUSINESS IMPACT ON ECONOMY
GDP AGRICULTURE PER SUB-SECTOR:
ANIMAL PRODUCTION 54%CROPPING 38%FORESTRY 8%
LAND BASED INDUSTRIES EXPORTS (as a % of total): 67.3%
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Transparent land market
The whole country is mapped with soil types according to productivity
Each soil type has an associated productivity index (Coneat Index System)
Information is public and available on line (verifiable)
Inserting land property number(s) Coneat Data Base shows online:
Location Water resourcesDetailed map with soil types and their productivity indexDescription of each soil typeThe average Coneat productivity index for the property
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LAND MARKET
ADVANTAGES OF THE CONEAT SYSTEM
Transparent land market allows to verify information for every piece of land in Uruguay
A very handy and useful tool to assess potential land use for any given property
The Coneat Index correlates with the price of land
Thus easy to compare properties and assess fair market value
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THE COST OF LAND
(1HA = 2.47 ACRES)
Map Regions created by Terramar Christies to facilitate the analysis
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www.terramar.com.uy
EXPECTED PROFITABILITY ACCORDING TO LAND USE
QUOTED VALUES DO NOT INCLUDE LAND APPRECIATION
Source: CREA Groups 2012; Terramar Christies market average information last 5 years
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FARMLANDS MANAGEMENT
FARMING COMPANIES IN URUGUAY ARE EASY TO SET UP & OPERATE
1. THE BUYER/INVESTOR MAY FARM LAND DIRECTLY
2. THE INVESTOR MAY HIRE A SPECIALIST FARM MANAGEMENT COMPANY TO DO THE JOB
3. INVESTOR MAY LEASE THE PROPERTY TO A THIRD PARTY
THERE IS A HIGHLY LIQUID MARKET FOR FARM LEASING THIS MARKET IS VALID FOR ALL LAND USES NEVERTHELESS DEMAND FOR CROPPING LAND IS HIGHEST
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TAXES IN FARMINGFARMING SECTOR HAS FAVORABLE TAX TREATMENT INCOME TAX:
Flat 25% rate (may be 10-20% with deductions) Small farms (below U$S 238,000/year) rate is lower
ASSET TAX: exonerated by law
PROPERTY TAX: low (0,2% average)
ADDED VALUE TAX (VAT): exonerated for most of the main productive inputs and active assets related to farming
CAPITAL GAINS TAX: 12.5% for corporate vehicles (lower for individuals)
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WHY FARMLANDS IN URUGUAY
FINAL COMMENTS
Strategic location
Competitive logistics, infrastructure & communications
Highest life quality standards in SA
Human Resources: availability of educated & trained people
Sound Business Environment:
Stable & Safe countryExpanding economySolid legal systemInvestor friendly
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WHY FARMLANDS IN URUGUAY
FINAL COMMENTS
Ideal conditions for efficient farming systems (climate, soils, water, etc)
Diversity of farm types and farming systems
Solid and integrated agribusiness chains
Transparent & liquid land market
Easy to purchase and develop farming companies
Competitive land prices & consistent annual returns
Favorable tax treatment
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WHY FARMLANDS IN URUGUAY
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RURAL PROPERTIES & AGRICULTURAL BUSINESS CONSULTANCY
Farmland Sourcing
Land Valuation
New Farming Venture Assessment
Integral Agricultural Advice
Integral Farm-related Legal & Taxing Advice
Structuring Land Purchase & Land Based Companies
SERVICES
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www.terramar.com.uy
THANK YOU
MAIN OFFICES
Gorlero esq. Calle 17PUNTA DEL ESTE – URUGUAY+598 4244 2222campos@terramar.com.uy
RURAL PROPERTIES & AGRICULTURAL BUSINESS DIVISION
Ignacio GonzálezAgricultural Business Consultant (MSc)Director+598 95630806ignacio@terramar.com.uy
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