Farmland Investment in Uruguay

Transcription

1 Farmland Investment in Uruguay 2018

2 Advantages of Investing in Farmland n Increasing global demand for food n Consistent long-term appreciation n Annual cash return n Non-volatile asset n Store of value

3 Why Uruguay? Investor-Friendly Country: n Foreign and local investors treated equally n No limitations to ownership by foreign buyers n No currency exchange controls or forced conversion n Foreign currency can be used: Dollars, Euros, etc. n No restrictions or taxes when transferring money into, or out of the country (repatriation of capital)

4 Why Uruguay? Stability and Safety: n Latin America s safest country n Tops rankings in political and economic stability n Tops rankings in transparency and lack of corruption n No social turmoil: existence of middle class and Latin America s lowest income gap n Solid legal system with strong reputation for respect of contracts and private property

5 Why Farmland in Uruguay? A) Most suitable country B) Turnkey, easy investment to operate C) Transparent market

6 A) Uruguay s Suitability n Non-degraded soil n Even rainfall year-round n World s largest aquifer beneath region n Temperate climate n Two crops per year (over long run: 1.7) n Competitive producer n No government intervention in the market n Developed land rental market

7 Uruguay: A Global Player n 6 th exporter of soybeans n 5 th exporter of dairy products n 4 th exporter of rice n 5% of global beef exports Plus, Uruguay is the only country in the world with 100% traceability of its cattle herd A country of 3 million feeding 50 million

8 n MAPA DE CHRIS ACA ********** ******** Source: Atlas of the Biosphere Center for Sustainability and the Global Environment University of Wisconsin - Madison

9 Global soil degradation, and where Uruguay stands

10 Global water shortage and where Uruguay stands Source: Intergovernmental Panel on Climate Change, 2007

11 B) Turnkey, Easy Investment Most investors choose to: n Outsource management of the operation to a farm management firm, which handles all aspects of the business; or n Lease out the land (there is a very liquid rental market available)

12 C) Transparent Market for Land n The country is mapped, with soil types classified according to their productivity n Each type of soil is has a productivity index ( CONEAT index) n The map is available online n Thus, land productivity is verifiable

13 The Online CONEAT System n Type n Plug in the property number(s) n The system will show the specific property s: q location and water resources (rivers, creeks, lakes) q detailed soil map, with soil types in different colors, and the percentage of each soil type q description of each soil type q the productivity index of each soil type ( CONEAT index) q the average CONEAT index for the whole property

14 The Online CONEAT System: Example Map of the property, with different soil types Location of the property Water resources Average CONEAT index for the property Property number

15 Advantages of the CONEAT System n It allows anyone to verify the productivity potential of a property in Uruguay n It provides a tool to determine uses for a specific farm n The CONEAT index of a property correlates with the price of the land. The market is thus very transparent: it is easy to compare properties and determine their fair value

16 Types of Land in Uruguay n Agriculture (soybeans, wheat, rice, etc.) n Cattle/sheep ranches, dairy farms n Forestry: eucalyptus, pine n Vineyards / olives / blueberries n Oceanside rural land for development

17 Uruguay s most attractive options Agriculture: Soy, Wheat, Corn Global player, among leading exporters Forestry: Eucalyptus, Pine World s two largest paper mills World s highest FSC certification Cattle: Angus, Hereford Top global quality 100% traceability 5% of world beef exports

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21 The Price of Land USD 1,500 /hect (USD 607 /acre) Coneat 50 USD 3,500/hect (USD 1,417/acre) Coneat 100 USD 8,000/hect (USD 3,238/acre) Coneat 170 AGRICULTURAL HEARTLAND USD 2,700/hect (USD 1,093/acre) Coneat 80

22 2018: A perfect buying opportunity? With China s slowdown in 2015 and the drop in commodity prices, in , farm prices decreased for the first time in over a decade. Opportunities at 30% below the price peak of 2014 are available throughout Uruguay.

23 Taxes in farming Farming has favorable tax treatment n Income tax: in Uruguay: Flat 25% income tax rate, levied on net income For small farms, the rate is lower: farms with gross income below USD 238,000 per year have a capped tax amount of USD 5,125 n Low property taxes: average is 0.2% *

24 Examples of Available Farm Properties on the Market

25 AGRICULTURE: 65 h (160 acres) in SW, index: 160 (high) USD 520,000 (3,238 / acre)

26 AGRICULTURE: 615 h (1,519 acres) in W, index: 135 (high) USD 4.2 M (2,764 / acre)

27 FORESTRY: 800 h (1,976 acres) in center, near new pulp mill site; forestry soils (index: 86) USD 2.8 M (1,417 / acre)

28 CATTLE: 650 h (1,605 acres) in E, index: 90 (avg.) USD 1.85 M (1,174 / acre)

29 Fischer & Schickendantz n Leading Full-Service Law Firm n Farmland investment advisory unit: Sourcing farmland according to client needs/preferences Structuring purchases Organizing corporate structures, ongoing farm management n Firm Services (covering all of Uruguay): Conveyance / Legal Assistance in the Purchase Process Tax and Banking Advice Company Incorporation Title Guaranty Advice

30 Fischer & Schickendantz References and Recognition: Leading source on investing in Uruguay to global publications such as the Financial Times, The Wall Street Journal and The New York Times (see articles in ) Ranked by Chambers Latin America, Leading Firm Ranked by The Legal 500, Leading Firm Ranked by International Financial Law Review Ranked by the International Tax Review

31 Fischer & Schickendantz Contact Information: Managing Partner Juan Federico Fischer Phone: (598) Fax (598) Main office: Rincon 487, 4 th Floor, Montevideo 11000, Uruguay

32 Further Information fs.com.uy uruguayfarms.com fsuruguay UruguayFarms