Investing in Uruguay: Farmland

A stable economy, legal protections and tax benefits for investors make Uruguay farmland your best choice.

By Clara for Guru’Guay

Money | Relocating & Investing

Last updated on July 29, 2024

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Ninety-five percent of Uruguay is rural and Uruguay is roughly the same size as England and Wales combined. At the end of the last century, Uruguay was predominantly a cattle-raising nation. You may have heard that in Uruguay there are 3.5 cows for every human. However, following an economic crisis in neighbouring agri-nation Argentina, by 2002, a shift to crop-growing began, and now there are 1.5 million hectares dedicated to row crops. Learn why investors choose to invest in Uruguay farmland.

Why invest in Uruguay?

Uruguay is an attractive choice to investors thanks to its stability and predictability. The economy has been very stable for the last twenty years—unlike in neighbouring Argentina where unfortunately political unrest and financial crisis are the norm.

Uruguay has:

A solid economy
a sound legal system,
protections for private property and respect for owners—there’s no history of government expropriations
benefits and tax-breaks for investors and
the lowest levels of corruption among Latin American countries, on par with European and OECD standards.

Uruguay fosters an investment-friendly environment where the rights of investors are safeguarded. Both international and domestic investors receive equal treatment.

Why invest in farmland in Uruguay

As a small nation, Uruguay has historically positioned itself as an attractive destination for foreign capital. Successive governments, regardless of political affiliation, have maintained a consistent policy of treating foreign investment favorably.

About 95% of the land in Uruguay is rural. The most fertile soil is in the south-west and is dedicated to row crops and vineyards. The less productive land in the rest of the country is mostly used for cattle raising and forestry, where you can see the cows grazing around and in between trees. In the north you’ve got rice and sugar production, and there are new and niche agricultural projects like cultivating mushroom or wagyu beef rising.

Currently foreign investors own about one-third of Uruguay’s land. The country’s agricultural landscape has transformed significantly; two decades ago, Uruguay was predominantly a cattle-raising nation. However, by 2002, a shift began, and now there are 1.5 million hectares dedicated to row crops. This shift was largely driven by major agricultural groups from countries like Argentina who were looking for stable investment opportunities with predictable tax environments. These groups brought their expertise and technology to Uruguay, significantly impacting the agricultural sector.

Openness to foreign investment translates into advancements in technology, equipment, employment, and crop enhancement. It’s lead to substantial improvements in infrastructure, such as land development and the construction of barns, silos and ports.

Uruguay has a well established reputation as an exporter of commodities. In 2022 it was the fifth biggest exporter of beef, fourth exporter of rice, sixth exporter of soybeans and has internationally acclaimed wines and a burgeoning logging industry. Uruguay is now the second exporter of short fibre for pulp for paper in the world after Brazil.

More boutique crops include wild honey to organic blueberries and wagyu beef.

Typical returns on agricultural investment in Uruguay

Agriculture: Focusing on row crops like soybeans, wheat, and corn, investors can expect annual yields of approximately 4 to 7%.
Cattle grazing: As a leading producer of cattle and beef, this sector offers more stable returns, generally between 2 to 4% annually, with the potential for higher yields in highly efficient operations. There are less weather-related risks and scalable productions may bring in a little more.
Timber: Specialising in eucalyptus cultivation for pulp and paper production, timber production offers yields ranging from 7 to 11%. Forestry investments typically pay out in lump sums every nine years, though larger investments may provide annual returns.

Forestry is not always welcome

There has been some unrest from environment conscious citizens regarding the paper pulp mills and their extensive use of land for forestry, from lowering the water table to changing the character of the Uruguay landscape. When Uruguay faced a water crisis in recent years, many were quick to blame this industry, however experts point out that the drought was the result of multiple factors.

Forestry practices do come with their challenges. Concerns have been raised about it, such as its impact on the water reservoirs and changes to Uruguay’s natural scenery. In response, Uruguay has implemented safeguards:

A law in the mid-1980s began the process of mapping and categorising the lands in every corner of the country according to soil type and suitability. This created a productivity index for each soil category, serving as a primary safeguard to ensure land is used optimally. This index is publicly accessible, ensuring transparency and adherence to best practices in land use.
Environmental permits are mandatory for tree plantation projects to prevent soil degradation and excessive deforestation.

Cover photo: Cattle in Uruguay by Jimmy Baikovicius

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