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Reasons to invest in agribusiness in Uruguay

by | Jan 27, 2024

The importance of agribusiness in Uruguay is manifested in the country’s production of quantities of food that far exceed its domestic consumption requirements.

What are the main crops of Uruguay?

Among dryland crops, the primary productivity occurs in:

  • Wheat
  • Barley
  • Corn
  • Sorghum
  • Soy
  • Other oilseeds

Regarding irrigated crops in Uruguay, the highest production occurs in:

  • Rice
  • Sugar cane

What are the largest agricultural regions in Uruguay?

The regions with the most significant agricultural activity with dryland crops are found mainly on the country’s coast in departments such as:

  • Paysandu
  • Rio Negro
  • Salto
  • Colonia
  • Soriano

Meanwhile, the regions with the highest production in terms of irrigated crops are found in the departments of:

  • Artigas
  • Treinta y Tres
  • Cerro Largo
  • Rivera

Livestock farming in Uruguay

The same characteristics that enhance agriculture, such as climatic factors, hydrographic networks, and soil fertility, also make this an environment more than conducive to the production and breeding of livestock.

According to the latest censuses in the country, there are at least 38,000 livestock establishments, occupying approximately 13 million hectares of pasture where more than 12 million head of cattle are raised. Uruguay produces around 550,000 tons of beef annually, 180,000 for internal consumption and 370,000 for external consumption.

Agribusiness in Uruguay is a lucrative investment

There are many reasons to invest in agribusiness in Uruguay, such as these five:

The exceptional situation of the country in the regional context

Uruguay has a robust and consolidated democratic system, through which the three most representative political parties have alternated in government, thus maintaining a commitment to respect and stability of the business climate.

Additionally, after 17 years of slowed but uninterrupted economic growth (the longest in the country’s history) between 2003 and 2020, it is currently one of the most equitable countries with the highest per capita income in Latin America and the Caribbean.

The macroeconomic solidity, the reduction of vulnerabilities in the banking sector, the ample reserves, the diversification of exports, and the energy matrix have allowed stability to be preserved in a more turbulent regional and global environment.

Potential and availability for agricultural activity

Among the territories that make up Uruguay, 16.4 million hectares are suitable for agricultural activity. That is, more than 90% of the country’s land area. In addition, land has appreciated substantially, quadrupling over the last 15 years.

With a population of approximately 3.4 million inhabitants, Uruguay produces food for 28 million people. The country has the potential to continue increasing the production of agricultural and agro-industrial goods.

According to the Food and Agriculture Organization of the United Nations (UNAA/FAO), the demand for agricultural goods is steadily increasing worldwide. This has been the case since the seventies, maintaining a firm trend for the coming decades, fundamentally supported by demographic advancement and greater consumption of proteins, fats, and sugars in developing economies.

Investment viability and protection for agribusiness in Uruguay

The promulgation of the Investment Promotion and Protection Law No. 16,906 has established that foreign investment in Uruguay must receive the same treatment as national investment. There are no restrictions on the repatriation of capital nor the transfer of profits, dividends, and interest.

Advantages of Uruguay in food production

Together with Argentina, Brazil, and Paraguay, Uruguay makes up the largest food-exporting region in the world. In addition to the aforementioned climatic conditions, soil fertility, and hydrographic networks, Uruguay has various comparative advantages in producing food and agricultural goods at an international level.

Likewise, the recognized prestige of Uruguayan agricultural production on the world map is also explained in the production processes and quality of various farm products, which are focused on safe production and guided by the strictest health controls.

The advanced use of new technologies in Uruguay’s agricultural sector allows for the absolute availability of information on the products from when an animal is born, for instance, until it reaches the final consumer. These georeferencing systems are also being applied in various other sectors, such as poultry meat, honey, citrus, and viticulture.

Sustainability and environmental protection

Uruguay maintains a strict policy of sustainable and environmentally friendly agricultural development that includes, among other things, plans for the use and responsible management of soils and sustainable dairy production.

Additionally, Uruguay leads the energy transition throughout the American continent. It has been recognized for its successful commitment to renewable energies in the 2020 Energy Transition Index of the World Economic Forum. In the index, in addition to the first position in the American continent, it occupies the eleventh position globally.

Since the country committed to transforming and generating energy from renewable sources in 2007, it has contributed significantly to environmental protection, the economy, and the well-being of citizens. Currently, Uruguay produces 98% of its electricity from renewable sources.

In this way, Uruguay is consolidated as a country of high agricultural development and environmental friendliness in a highly productive region, with outstanding comparative advantages in the sector, which offers stability, security, and ample opportunities for investment in agribusiness.

Investment in agribusiness in Uruguay is an attractive option due to its exceptional potential, robust democratic system, and sustained economic growth. With a focus on both dryland and irrigated crops, including wheat, barley, corn, soy, rice, and sugar cane, the country’s diverse agricultural regions offer vast opportunities. Livestock farming is thriving, with over 38,000 establishments and 12 million cattle, contributing to Uruguay’s annual beef production of 550,000 tons. The nation’s stable macroeconomic environment, commitment to democratic principles, and the Investment Promotion and Protection Law ensure a favorable climate for foreign investment. With 16.4 million hectares suitable for agriculture and a population of 3.4 million producing food for 28 million, Uruguay emerges as a key player in global food exports. The country’s dedication to sustainability, environmental protection, and renewable energy further solidifies its position as a leader in agricultural development, offering stability and ample investment opportunities in the agribusiness sector.

Contact LATAM FDI to discuss your foreign direct investment plans in Latin America.

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