MercoPress. South Atlantic News Agency

NZ company further expands in Uruguayan farming

New Zealand rural services company PGG Wrightson continues to expand in South America. The NZX-listed company announced the purchase of a 51% stake in Romualdo Rodriguez , a Uruguay-based livestock, wool and rural real estate business.

PGG Wrightson managing director Tim Miles said the acquisition further strengthened the company's strategic position in South America. The controlling stake in Romualdo Rodriguez added to the firm's successful seeds businesses, which included Alfalfares in Argentina, and the management business servicing farms owned by NZ Farming Systems Uruguay. "South America is making an increasing contribution to PGG Wrightson Group's financial performance and is a significant employer with 400 staff now working directly and indirectly for the company in the region" Miles said. Romualdo Rodriguez had a 43-year history of farm services in Uruguay and had established a position of leadership, PGG Wrightson said. The livestock business returned annual sales of about 30 million US dollars. Barry Brook, group general manager South America, said: "Romualdo Rodriguez is a long-standing successful operator in Uruguay with a nationwide presence and breadth of operations in livestock, wool and real estate including procurement for meat-processing companies and internet-based livestock auctions". NZ Farming Systems Uruguay was floated on the NZ stock exchange in December, having been set up by PGG Wrightson to develop dairy-farm operations in Uruguay. PGG Wrightson holds the fund and farm manager contracts for NZ Farming Systems - which owns 36,300 hectares of farmland bought for an average price of 2.601 US dollars a hectare. Comparable land in New Zealand could cost between 45,000 and 50,000 US dollars a hectare. NZ Farming Systems completed 110 million US dollars capital-raising exercise in December by issuing shares at 1.50 each. Shares closed the week down 5c at 1.84. PGG Wrightson was entitled to a management fee equivalent to 1.5% of the gross asset value each year, reducing to 1% after June 30. The company's shares have risen sharply during the past month from about 2.05, closing down 6c yesterday at 2.69.