Glimpses of Uruguay

In November 2010 I spent 10 days in Uruguay. This was my fourth trip there in recent times, with three previous trips in 2005 and 2006. This time I was there primarily to present a paper on innovation in the red meat industries, with my visit funded by INIA, which is the Uruguayan national agricultural research organisation. While I was there, I also ran some sessions with several groups from the dairy industry on a range of topics, and also a more general session with INIA on innovation issues.

But this post is not really about any of those issues; rather, it is more about some general observations on what has been happening in Uruguay in recent years. (See below for photos)

To Kiwis like myself, Uruguay is always a fascinating place. Like New Zealand, its economy depends on pastoral and arable agriculture. Like New Zealand, it is small and compact. Like New Zealand, it used to be one of the very wealthiest of nations some 50 and more years ago, but since then we have both been sliding down the economic wealth tables relative to the rest of the developed world. In that regard, Uruguay has suffered considerably more than New Zealand. Like New Zealand, Uruguay has long treasured democratic traditions, although Uruguay did lose its way for a while in the 1970s and 1980s, both before and after the military took power.

Since I was last there in 2006, the Uruguayan economy has been booming. The world financial crisis of 2008 and 2009 was just a gentle crosswind within an overall period of downwind sailing. However, there was a major drought in 2008/09 which did create some brief headwinds. Nevertheless, in these last few years nearly everyone has done well in Uruguay. The big exception is New Zealand’s flagship Uruguayan agricultural project, led by New Zealand company PGG Wrightsons, and called New Zealand Farming Systems Uruguay (NZFSU). But how this major New Zealand company could suffer so much, when everyone else there was moving forward, I will leave to another post. Enough to say that it has been a sad story of arrogance and ignorance, each feeding off the other.

When questioned as to what have been the major drivers of economic growth, my Uruguayan friends quickly point to the farming revolution brought about by high prices for soyabeans combined with zero till technologies. Although soyabeans are a nitrogen-fixing legume, when grown traditionally they tend to deplete soil organic matter and many key minerals. But soyabean combined with maize in rotation, and all with zero-till technology, has changed the face of agriculture. On this trip I saw soyabeans growing on land that was totally pastoral only four years ago. There are still some debates about long-term sustainability, but so far, and as long as fertiliser is applied, the results have been outstanding.

At times Uruguay seems like three different countries. First, there is the capital city Montevideo, a bustling seaside city of more than 1 million people, and the place where all significant business takes place. Then there is Punta del Este, to where the wealthy flock from Argentina, Brazil, and even Europe, for their December and January holidays. During those months the population of Punta del Este swells some tenfold to more than half a million. A beachside apartment can easily rent for more than $US15,000 for the month of January. The same apartment can be rented for $US500 per month for much of the rest of the year. And then there is the third part of Uruguay, comprising both rural and urban poor.

The politics of Uruguay are fascinating. The President of Uruguay is the colourful Jose Mujica, a former member of the Tupamaro urban guerilla movement, who spent some 12 years in prison under dreadful conditions. He was elected President by popular vote in 2009, but remains a man of the people. No-one questions that Mujica ‘s heart is with the poor. Yet ironically, some of the fiercest criticism of Mujica comes from the left from within his own governing coalition. These are people who would like to pull down the wealthy and redistribute to the poor. Mujica himself leads a simple life, and shuns wealth and ostentation, but recognises that the poor cannot be helped unless there is international confidence in the stability of the country. Mujica and his wife, Senator Lucia Topolansky, toured New Zealand back in 2007, at which time he was Minister of Agriculture. His party took a keen interest in all things agricultural, and the institutions that influence agriculture. Of all the international visitors we get at Lincoln University, I rate that Uruguayan delegation, with their interest in issues rather than formalities, as being a standout.

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Montevideo

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Beach business at Punta del Este

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The horseman

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The plains of Uruguay

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About Keith Woodford

Keith Woodford is an independent consultant, based in New Zealand, who works internationally on agri-food systems and rural development projects. He holds honorary positions as Professor of Agri-Food Systems at Lincoln University, New Zealand, and as Senior Research Fellow at the Contemporary China Research Centre at Victoria University, Wellington.
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2 Responses to Glimpses of Uruguay

  1. Kurt says:

    Hey Keith, I have been doing some brief research on Uruguay and from what I have seen the country generally appears to generally have good annual rainfall which is well distributed and a temperate climate. Uruguay also appears to have much cheaper land than NZ. This would seem to suit a NZ low input dairy system but has not done so in the case of NZFSU. From your knowledge do you see any short term potential in being able to use NZ dairy knowledge and systems to make a profit in Uruguay?

    ps have found your blogs very interesting

    • Keith Woodford says:

      Kurt
      In Uruguay the rain can come at all times of the year but it is not reliable. And when one part of the country is in drought it is likely that all parts are in drought, so feed and selling options are limited. In my opinion NZFSU got into trouble because they thought they knew more than the local people and their execution was bad. I expect that the new management systems put in place by Olam will be more successful but they will have to watch their cost structures. The new management systems of Olam comprise pasture as the base feed but with considerable supplement. Also, Olam are imposing new management disciplines. There is no doubt that grassland farming systems can work in Uruguay and there are some very good local Uruguayan farmers who are doing this successfully, but if Kiwis try and transplant NZ systems without learning from the locals then they will come unstuck. Over the last four years it has been very hard to lose money in Uruguay but somehow NZFSU managed to do so. A sad and embarrassing experience.
      KeithW

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