Focus on Uruguay

by Meyer Sosland
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Uruguay is a country that has built a successful role as an agricultural exporter of livestock, particularly beef, helping to give it one of the lowest levels of poverty in South America. The grain industry is also vibrant in Uruguay, with production increasing due to high grain prices and demand for grain for animal feed.

It’s a large country with a lot of agricultural land, said Jenny Burt of British Food Solutions, which imports meat from Uruguay. Most of the nation’s population of 3.4 million is concentrated in the Montevideo region, where there are 1.8 million residents.

"It’s hectares and hectares of nothing with the odd estancia (ranch)," Burt told World Grain. "The land is mainly used for grazing, with cattle and sheep."

Grain is vital to the livestock industry as feedstock through the winter. Burt contrasted Uruguay with its neighbor, Argentina.

"The major difference is the soil," she said. "Argentina has the pampas, with deep topsoil. Uruguay is made of rock, with shallow grass. It dies out very quickly, particularly in their winter."

Because of the quality of grass, grain is needed for feeding animals. "They’re taking more care under the influence of the world shortage (of quality beef)," she said. "There is pressure on them to improve quality."

Uruguay is not short of water. "They’ve got rice in the east, in paddy fields," she said. "The cattle eat thee remains of the rice plants."

Uruguayans are generally well fed. According to the United Nations Food and Agriculture Organization’s (FAO) Nutrition Country Profile, there are some problems with malnutrition, particularly among young children in the poorest households. "This problem has been monitored since 1980, and a significant decline of the phenomenon has been detected with respect to various forms of underweight, stunting and wasting," the profile said.

However, the FAO is concerned about obesity, which it describes as quite prevalent. "Even though the population’s educational level is satisfactory, Uruguayans’ knowledge, attitudes and practices concerning food are inadequate. Hence, programs of nutritional education for healthy diets should be initiated forcefully and urgently for the entire population," it said.

There is also concern about Uruguayans’ high consumption of animal products, particularly beef and milk, which means a high-fat diet. "Consumption of vegetables and fruit has not yet reached acceptable levels, although it is improving," the FAO said.

The International Grains Council (IGC) puts Uruguay’s wheat harvest at a steady 400,000 tonnes, a figure unchanged since 2005. But according to the Yearbook issued by the Agricultural Programming and Policy Office (OPYPA), a unit of the Ministry of Livestock, Agriculture and Fisheries (MGAP), the 2006-07 crop came to 611,000 tonnes, far more than domestic demand and well above the 2005-06 total of 242,344 tonnes.

Total wheat exports from November 2006 through October 2007 came to 193,500 tonnes, OPYPA said. Flour exports were also steady, with sales to other countries (almost all of it to Brazil) totaling 17,000 tonnes, equivalent to 24,500 tonnes of wheat, bringing the wheat export total to 218,000 tonnes. However, the fast pace of exports in the early part of the year meant a shortage of flour in the second half, resulting in wheat imports of 35,000 tonnes and another 1,000 of flour.

The writer of the Yearbook’s report on the wheat market, Gonzalo Souto, puts apparent Uruguayan consumption of wheat during 2007 at 429,625 tonnes with the total milled at 453,125 tonnes. Because of the country’s grain surplus, prices were at export parity in December and January and 36% above the previous season’s level.

Wheat production is set for another sharp rise in 2008. With the planted area up 38% at 267,000 hectares, production is predicted to rise to 747,600 tonnes, despite an 11% fall in yield to 2.8 tonnes a hectare from the previous year’s record level of 3.16 tonnes. Conditions were good during the winter, but too much rain shortly thereafter increased disease problems, including fusarium, so that by the time the first harvesting started analysts were predicting the yield reduction.

Uruguayan farmers have boosted maize production, with a record harvest in 2007-08 of 338,500 tonnes, thanks to a 20% rise in area and a record yield of 5.8 tonnes a hectare. That gave scope for exports of 98,937 tonnes. In most years, Uruguay exports no maize, while imports have been steady with a recent peak at 364,786 tonnes in 2000-01. It meant that for part of the year prices were at export parity, a boost for internal users.

According to a preliminary survey done by Uruguay’s agricultural statistics office (DIEA) in the second half of July 2007, the area for the 2008-09 crop is sharply higher, up 55% at around 90,000 hectares. The crop is, therefore, expected to rise to 405,000 tonnes, although the strength of the animal feed sector means that consumption will likely rise to 350,000 tonnes, leaving Uruguay with a theoretical 55,000 tonnes to export.

Uruguay is also an important producer of barley malt. According to the IGC, Uruguay will export a total of 325,000 tonnes in 2007-08, a figure which has been rising steadily over the last few years. Last year’s figure was 315,000 and in 2004-05 it was 285,000 tonnes.

DIEA put the total area of malting barley grown in 2006-07 at 127,450 hectares, with production at 432,065 tonnes. In the previous year, 242,344 tonnes were grown on 78,100 hectares. In 2006-07, increased area and high yields combined to produce a crop much greater than domestic demand, which is why Uruguay ended up exporting more malting barley.

According to Gonzalo Souto’s analysis for OPYPA’s Yearbook, Uruguay has the capacity to produce 235,000 tonnes of malt a year using 330,000 to 350,000 tonnes of barley. Excess barley production meant that Uruguay exported unprocessed barley in 2007.

Exports of malt during the first 10 months of 2007 mostly went to Brazil (89%), with Paraguay and Peru taking 3% each and Chile taking 2%. The leading exporters, according to Gonzalo Souto, are the Ambev group members Malteria Uruguay SA (MUSA) and Cympay (Uruguay’s biggest brewer), which were responsible for 80% of exports, with Malteria Oriental SA (MOSA) taking the rest.

The area planted with barley intended for malting is up by 14% in 2007-08 to 145,000 hectares, but excess rainfall has dropped yields to a projected average of 2.3 tonnes a hectare, compared with 3.39 tonnes a hectare the year before. That would give a total crop of 333,500 tonnes.

Uruguay is also increasing its soybean production. According to a report published by the U.S. Department of Agriculture (USDA) in November, the harvested area for 2008-09 is forecast to increase to 400,000 hectares from 360,000 in 2007-08.

Production is forecast to rise to 810,000 tonnes from 750,000, with exports rising to 775,000 tonnes from 750,000. The rise is due to better returns for producers, sunflowerseed area being switched into soybeans and the interest of Argentine producers in growing soybeans in Uruguay to avoid Argentina’s increased export taxes. However, the lack of capacity of the crushing industry means that Uruguay is likely to remain a net importer of soybean oil and meal.

Rice is another important sector, with the crop averaging between 1 million and 1.2 million tonnes a year, according to Saman, the country’s biggest rice processor. Saman told World Grain

that it processes around 50% of the rice produced.

Most of the rice is grown in the east, central and northern regions of Uruguay. "Rich soils and adequate pure water supply makes these areas well suited to growing rice," the company said.

However, Uruguayan rice consumption is relatively low at 11 or 12 kg per person per year, which means that 95% of production is exported. Saman said it is exporting to a growing number of places including Peru, Iran and Europe. "In addition to these destinations, we export to Brazil, our main buyer," he said.

The company explained that rice millers in Uruguay buy directly from farmers, with no government agency involved. "The price we pay to farmers is agreed upon between farmers and millers on account of the average selling price achieved through exports," Saman said. Saman’s farmer suppliers get financial support and help from the company’s technological department. Saman also sells them seed produced and certified by its own mills.

"As a result of this, we sell to the world high-quality rice, free of GMO, and in spite of the fact that we produce more than one variety of long grain rice, we are in a condition to guarantee our buyers that they are acquiring single variety rice."

The company complained that Uruguay, which does not subsidize rice production, is obliged to compete at a disadvantage with exporting countries which do apply subsidies. WG

Chris Lyddon is World Grain’s European editor. He may be contacted at: