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%) www.terramar.com.uy
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$S Millions) goods & services: 12379
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MACROECONOMIC INDICATORS (2011) Trade Surplus/Deficit (U$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
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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 FRIENDLY
INVESTMENT 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 FRIENDLY
INVESTMENT 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 CROPPING FORESTRY
54% 38% 8%
LAND BASED INDUSTRIES EXPORTS (as a % of total): 67.3%
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LAND MARKET 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 resources Detailed map with soil types and their productivity index Description of each soil type The average Coneat productivity index for the property
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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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EXPECTED PROFITABILITY ACCORDING TO LAND USE
Source: CREA Groups 2012; Terramar Christies market average information last 5 years
QUOTED VALUES DO NOT INCLUDE LAND APPRECIATION www.terramar.com.uy
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 FARMING FARMING 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 country Expanding economy Solid legal system Investor 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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SERVICES 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
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THANK YOU
MAIN OFFICES
RURAL PROPERTIES & AGRICULTURAL BUSINESS DIVISION
Gorlero esq. Calle 17 PUNTA DEL ESTE – URUGUAY +598 4244 2222 campos@terramar.com.uy
Ignacio González Agricultural Business Consultant (MSc) Director +598 95630806 ignacio@terramar.com.uy
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