“Would you rather own ALL the gold in the world or ALL the farmland… ?” (Warren Buffet, CNBC, March 2, 2011)
“Farmland Is Where the Money Is” (Jim Rogers, August 10, 2011)
“You have to buy it in places like Uruguay, where it hasn’t skyrocketed”
(Jim Rogers, Feb 13, 2013, on Business Insider)
Why Farmland? Increasing global demand for food
Consistent long-term appreciation
Annual cash return
Non-volatile asset
Store of value
Why Uruguay? It’s a Stable, Investor-Friendly Country:
Foreign and local investors treated equally
No limitations to ownership by foreign buyers
No restrictions or taxes when transferring money into, or out of the country (repatriation of capital)
Latin America’s safest country
Solid legal system
Why Farmland in Uruguay? Most suitable country
Turnkey, easy investment to operate
Transparent market
A) Uruguay’s Suitability
Non-degraded soil
Even rainfall year-round
World’s largest aquifer beneath region
Temperate climate
Two crops per year (over long run, 1.7-1.8)
Competitive producer, global player
Uruguay: A Global Player
6th exporter of soybeans
5th exporter of dairy products
4th exporter of rice
5% of global beef exports
A country of 3 million feeding 50 million
MAPA DE CHRIS ACA ********** ********
Source: Atlas of the Biosphere Center for Sustainability and the Global Environment University of Wisconsin - Madison
Global soil degradation, and where Uruguay stands
Global water shortage and where Uruguay stands
Source: Intergovernmental Panel on Climate Change, 2007
B) Turnkey, Easy Investment The investor has two choices:
Lease out the land, for a cash rental, paid up front (the rental market is very liquid) or
Hire a local farm management company, who runs, oversees and reports on the operation directly to you
C) Transparent Market for Land The country is mapped, with soil types classified according to their productivity
Each type of soil is has a productivity index (“CONEAT” index)
The map is available online: www.prenader.gub.uy/coneat
Productivity is verifiable; transparency
The Online CONEAT System: Example Map of the property, with different soil types Location of the property Average CONEAT index for the property Property number Water resources
Types of Farmland in Uruguay Agriculture (soybeans, wheat, rice, etc.)
Cattle/sheep ranches, dairy farms
Forestry: eucalyptus, pine
Vineyards / olives / blueberries
Real Estate: Montevideo
USD 2,500/hect (USD 1,012/acre) Coneat 50 The Cost of Land USD 11,000/hect (USD 4,453/acre) Coneat 150-180 USD 6,500/hect (USD 2,631/acre) Coneat 130 USD 4,000/hect (USD 1,619/acre) Coneat 80
Returns in Agriculture Two options:
Rent out the land to a tenant: 4 %
Hire farm management firm: 6 - 7 %
Plus appreciation of the land
Taxes in farming Farming has favorable tax treatment in Uruguay:
Income tax: Flat 25% income tax rate (effective rate can be 10-20% according to deductions) For small farms, rate is lower: farms with income below USD 250,000 per year have a capped amount of less than 5% net income tax
Very low property taxes: avg. 0.2%
How to Get Started Decide how much you wish to invest
Ask broker for options in that range
Tour the shortlist of farms you liked and visit possible farm management firm(s)
Make a decision, buy the farm
Hire a farm management firm to take care of everything, or lease it
