Uruguay Land Prices Double as Farm Policies Lure George Soros

by Dave

Bloomberg.com: Exclusive

A third of Uruguay’s agricultural property may now be owned by foreigners, according to Uruguay’s Rural Association. They include farm companies PGG Wrightson Ltd. of New Zealand and Buenos Aires-based Adecoagro, which is backed by billionaire investor George Soros.

International buyers, seeking to take advantage of rising global food prices, are attracted by the South American country’s relatively cheap land, policies that encourage foreign investment, and no tariffs on farm exports, said Roberto Vazquez Platero, a former agriculture minister. As a result, farm prices have more than doubled in three years.

Prime land near Uruguay’s western border with Argentina now costs $7,000 a hectare (2.47 acres), compared with $3,000 a hectare in 2005, said Michael Thomas, general manager of NZ Farming Systems Uruguay Ltd., which is managed and part-owned by Wrightson, New Zealand’s biggest agricultural services company.

On Argentina’s fertile Pampas plains, a hectare costs as much as $10,700, according to farm industry newsletter Margenes Agropecuarios.

“The west has priced up with the Argentines coming across and planting soy,” Thomas said in a telephone interview from Christchurch, New Zealand.

Iowa Corn Belt

Some Pampas land is now more expensive than in the Iowa corn belt, where, according to Iowa State University in Ames, Iowa, prices averaged a record $9,657 a hectare in 2007.

Farm prices have been pushed up by rising world consumption of cereals, oilseeds and meat. As a result, global food values rose more than 43 percent in the past 12 months, according to the Rome-based United Nations Food and Agriculture Organization.

In Uruguay, Argentine farmers don’t face the same taxes and price controls as they do at home. After four months of protests, Argentina’s producers forced President Cristina Fernandez de Kirchner to cancel a March 11 increase in oilseed export taxes to more than 45 percent from 35 percent. The scrapped tax would have made it unprofitable for many farmers, already stretched by the 35 percent levy, to grow soybeans, said Eduardo Buzzi, head of the Argentine Agrarian Federation.

By contrast, Uruguay, whose population of 3.3 million is
less than a tenth of Argentina’s, charges farmers a flat 25
percent tax on their income
.

“What Uruguay did was simply not to interfere,” Eduardo
Blasina, an agriculture analyst, said in an interview in
Montevideo. “Investment was welcomed.”

Uruguay sells most of its beef to Europe, Russia and the
U.S.

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