Wednesday, November 13th 2013 - 00:16 UTC

Uruguay sends bill to parliament banning ownership of land by foreign companies or governments

The Uruguayan government sent a draft law to parliament Tuesday that would ban the ownership of land by companies if they are in any way linked to foreign countries. The measure states it “aims to avoid the risk of foreign states breaching the sovereignty of the Uruguayan state in the absence of appropriate regulations and occupying a significant position in agricultural activity.”

The price of land in Uruguay has increased nine-fold in the last twelve years and the country fears the advance of sovereign funds

 The country's presidency, which announced the proposal, argued that land is a scarce and nonrenewable resource in Uruguay as it highlighted the economic importance of the agricultural sector.

According to the measure, ”some states participate (in land purchases) through companies and investment funds for agricultural production in order to provide food security to the populations of their countries.“

The proposed law seeks to have a ”deterrent effect” and cites legislation in Australia, New Zealand, Brazil and Argentina as precedents.

According to stats from Uruguay's Ministry of Agriculture in the last twelve years the average price of a hectare of land has increased nine-fold from 385 dollars in 2002 to 3.472 dollars currently. In the last thirteen years 7.1 million hectares (out of a total of 16 million approx) have changed hands with a turnover of over 9 billion dollars.

The stats office DIEA points out that the average price of land in 2012 was up 9% (over 2011), but since then values have stabilized while sale operations was down 10% and the land surface 5%. In 2012 agriculture land sales reached 1.17bn dollars.

In the first half of 2013 the price for leasing land is down 4% to an average 157 dollars per hectare.

However going back to prime agriculture land the average price per hectare ranges between 6.000 and 6.300 dollars. At the other end basalt to the north of Uruguay has an average going price of 2.300 dollars.

The increase in the price of land in Uruguay, as in neighboring Brazil, Paraguay and even Argentina despite the unorthodox conditions of that market, has been the boom in soy. Uruguay from virtually no crop has jumped to almost three million tons in a decade.

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1 Usurping Pirate (#) Nov 13th, 2013 - 09:33 am Report abuse
A very wise policy ......
2 AMGVVV (#) Nov 13th, 2013 - 09:43 am Report abuse
A very stupid policy...
3 Conqueror (#) Nov 13th, 2013 - 11:02 am Report abuse
Is it legal for a law to be retrospective in Uruguay? How will foreign companies react? Will they sell up? Will they leave the country?
4 redp0ll (#) Nov 13th, 2013 - 11:16 am Report abuse
The MP article does not represent a true picture.the objective is to prevent foreign governments such as China, Saudi Arabia or South Korea acquiring land either directly or through shell companies under government ownership
It does not apply to private firms or nationals investing in Uruguayan farm land.
Sounds reasonable to me
5 CabezaDura (#) Nov 13th, 2013 - 11:22 am Report abuse
It seems perfectly sensible thing to do...It also keeps land prices in Uruguay cheap for the local farmers, how much US$ does a hectare of land cost in average in URU???
6 redp0ll (#) Nov 13th, 2013 - 11:49 am Report abuse
Top quality arable around 6,200. Thin basalt ranch land about 2,300
The main pressure on arable comes from Argentine farmers buying or renting land on the Litoral to escape punitive taxes and detractions in thier own country
7 CabezaDura (#) Nov 13th, 2013 - 12:06 pm Report abuse
6) It’s still cheaper than land in Pergamino, Venado Tuerto, Junin, Rojas… Perhaps I wonder if land here is over inflated.
The Argentine real Estates have invented inflation in dollars (bunch of thieves the lot of them) Maybe you will be able to buy land cheaper in Argentina in a couple of years if the bubble explodes ;-)

It must be Vertisols you have there in Uruguay similar to the ones in Entre Rios ??
8 AMGVVV (#) Nov 13th, 2013 - 12:13 pm Report abuse
You're right @4 redp0ll. It makes sense to prevent foreign governments to buy farmland and that's what it seems this law is targeting. This article doesn't include all the info about the bill. Anyway, a country like Uruguay should be very careful not to stop FDI from private investors in agribusiness or any other business.
9 redp0ll (#) Nov 13th, 2013 - 01:19 pm Report abuse
CD. Yes I think soils in Entre Rios are similar.Here all land is graded by its productive capacity under CONEAT,the mean index being 100 and we pay taxes on the productive index rather than the physical area
Also in an effort to conserve the natural environment any riverine bush (monte natural) is exempt so long as it is maintained as such.
To give an example a top quality campo in Soriano index 240, for every 100 physical hectares they pay taxes as if it was 240 hectares
At the other end of the scale I have some sand dunes on my campo with a CONEAT index of only 4, so for each 100 has of that land I pay taxes equivalent to only four hectares
To me this seems to be a very fair way to tax land
@8 Totally agree
10 Room101 (#) Nov 13th, 2013 - 05:09 pm Report abuse
It isn't just your land you'd be selling.
11 redp0ll (#) Nov 13th, 2013 - 05:28 pm Report abuse
@101 The land is my life. It's not for sale
12 Think (#) Nov 13th, 2013 - 05:30 pm Report abuse

I find myself agreeing, yet again, with Mr Redpoll & Mr. CabezaDura...
They must be doing something right... ;-)))

Mr. CabezaDura....; I couldn't have said it better...:
”The Argentine realtors have invented inflation in dollars (bunch of thieves the lot of them) “

Mr. Redpoll; please do not mention ”Land Taxation” to Mr. CabezaDura....
Makes his blood pressure rise to dangerous levels....
13 redp0ll (#) Nov 13th, 2013 - 06:02 pm Report abuse
@12 Mr think. It's not the problem of Argentine realtors, it's the problem of the Us government printing money. Remember when the gold price was pegged at US dollars 32 the ounce?
As to land taxes I think most farmers are more or less happy to pay them so long as they can see them invested in better rural infrastructure rather than being siphoned off to support the ni nisi in the capital
14 CabezaDura (#) Nov 13th, 2013 - 06:21 pm Report abuse
13) It definately is a problema with the Argentine realtors. to me... There is no other explination as to why the land price increased over 100% in the last decade and land in US$ in Pergamino, Venado Tuerto,etc costs as much as it does in Illinions, its insane
15 redp0ll (#) Nov 13th, 2013 - 06:39 pm Report abuse
CD. Argentina has (or had ) some. of the most fertile soils on this planet,blessed by a relatively benign climate,so no underlying reason on a level playing field that the shouldn't be on par with Illinois .
16 CabezaDura (#) Nov 13th, 2013 - 07:10 pm Report abuse
Do you know how much does it cost to buy on the most fertile land in the world, Ukraine?? You will fall of your chair when you read this

If it worked only on the basis of physical output of the yields instead of economical profitability, urban prices would be the same everywhere. An office in downtown London is the same as one in Mexico Df, Singapour Nairobi, why would a plot of land to place a Factory will cost differentely in Chicago, Hambourg, Shangai?? ..

We dont earn in US dollars like the american farmers do we earn in AR$ at a rate the ONCAA fixes unilaterally for the exports

If this is a matter of the FED simply printing money land should cost 100 % more in the US. Most of the buyers in Argentina earn in AR$, we don’t earn in dollars for the exports…Urban prices have gone to the roof too in US$. Why would Think agree with me if he lives in Chubut which is not at all agricultural??
17 redp0ll (#) Nov 13th, 2013 - 09:28 pm Report abuse
Mr Think is a domador (horse breaker) in Chubut.Mostof the fertilityin that province is due to irrigation schemes put in by the Welsh pioneers. Squawk from Think anticipated!
Yes the chernozems of the Ukraine are more fertile but with the present corrupt government investors the price reflects the risk
Ukraine used to be the bread basket of Europe until Stalin liquidated the the peasant farmers, the kulaks.
Result: state run agriculture in the form of collective farms and Russia became a net importer of grain
18 Think (#) Nov 13th, 2013 - 10:10 pm Report abuse
Hold your horses Mr. Redpoll..... Do not exaggerate…

Mr. Think is NOT a “Domador” (Horse Breaker) in Chubut...

Mr. Think is just an unassuming. quasi-recreational practitioner of the “Doma India” (Indian Horse Taming methodology) in Chubut...
19 redp0ll (#) Nov 13th, 2013 - 10:48 pm Report abuse
@18 I stand corrected Think
20 CabezaDura (#) Nov 14th, 2013 - 01:32 am Report abuse
18) Where did you come about with this skill ¿?? Can you tell whats the difference between the horses that are domado traditionally with the ones you do?? Is it a very personalized horse to the tamer???
21 St.John (#) Nov 14th, 2013 - 02:11 am Report abuse
@ 16 CabezaDura
“Why would Think agree with me if he lives in Chubut which is not at all agricultural??”

“Think” owns una maceta, small scale agriculture.
22 CabezaDura (#) Nov 14th, 2013 - 02:34 am Report abuse
21) I believe there is some varieties of wheat you can do in certain parts of Chubut, but I have no idea what summer crops they can use down there.
23 St.John (#) Nov 14th, 2013 - 03:53 am Report abuse
As a matter of fact, Chubut is as far south of the Equator as northern Spain and southern France is north of it.

There is a warm stream flowing south along the coast and some “hotspots” around Sarmiento, and I know from a friend whose parents live in one of them, that it is possible to grow different kinds of berries - even strawberries - apples and white grapes.
24 CabezaDura (#) Nov 14th, 2013 - 05:15 am Report abuse
Well it certanly seems like a nice place to camp out and fish in Summer
25 Think (#) Nov 14th, 2013 - 09:37 pm Report abuse
(20) CabezaDura

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