Farming Sector

Agricultural products account for the largest share of exports from Uruguay
- primarily beef, wool, dairy products, timber, or else products manufactured with agricultural raw material.

It is only fair to say, therefore, that the basis of our economy is farming.

This is one of the reasons why it enjoys vast support from State credits, at advantageous interests and with broad terms for purposes such as infrastructure development, land improvement, purchase of machinery and breeding cattle.

In general the cost of money for the agricultural and cattle-raising sector is about 9% a year in US currency.

Private banking holds a secondary position in these loans because of its higher interest rates.

The tax burden has developed favorably, and the last congresses have shown a trend towards relieving the taxes on land and taxing real income, with a marked allowance for investment deductions.

MAIN PRODUCTS AND TYPES OF LAND USE

The leading products in this sector are meat -beef and meat of sheep-, wool, milk and milk by products and grains –cereals and oilseeds.

Among the cereals, conditions are suitably for growing wheat, oats, barley, sorghum and corn. Among the oilseeds, linseed, sunflower and soy bean are produced.

Rice growing is very important and so is timber, mainly rolls for the paper industry.

The characteristics of each farm are primarily determined by the features of the soil and the location of the farm. However, another factor is the ease and connections with which the farmer can reach certain markets.

Among the different types of use given to the land, establishments devoted to cattle-raising predominate, and mixed agricultural and cattle-raising operations come in second. If we consider the former, the farms which have a mixed operation with cattle and sheep cover most of the surface area (50%); whereas those where sheep prevail account for only 10% of the farmland.

On the other hand, cattle-raising farms may be classified based on which part of the productive cycle they specialize in: breeding, where cows are mated and calves are raised, and winter-fattening, where the final stages are fulfilled.

Some farms have the full cycle and carry out both stages.
The scale at which a company operates is a significant variable, because it determines the level and use they make of the investments and labor, their financial capacity and their efficiency in marketing inputs and outputs.

PROFITABILITY OF THE SECTOR

The profitability of the sector may be estimated from two points of view. The mean agricultural profitability, which takes into account the agricultural-cattle-raising production as well as the corresponding commercial transactions, is about 4%. However, if we consider the profitability study based on the financial capital applied to the undertaking, the rise in land prices in Uruguay is a relevant factor and it climbed steadily at an accrued 7.5% p.a. between 1983 and 1996. Adding the two profitability figures, the result is a rate that exceeds 11% a year, which is considered excellent because of the great security inherent to investments in agriculture and livestock.