Welcome to our last installment on the interior farmland of Uruguay. We are trying to decide on our next project–whether to head off to Paraguay or to Chile. What is YOUR major interest between the two?

We like to reaffirm periodically that there is no country that is without problems. We wish there were! Shangri La may have existed at one time. In fact, we once thought that the United States fit that title.  At this point in history every country has problems. Our individual task is to choose which one offers the best opportunity and which problems we can deal with the best. In our area we have great choices. Uruguay, Paraguay and Chile all have advantages to offer.  We tend to like these countries, but we try to be conscious of the need to give you the negatives that we know about, as well as the positives.

Chile is financially stable and beautiful. It has a variety of climates and terrain—from the comfortably arid north, which borders on the Atacama Desert, to Patagonia in the south, and from the ocean to the Andes. Just about anything you want is there–skiing, hot springs, river rafting, warm weather, cold weather. I had the privilege to meet with two of our subscribers this week who are visiting in Buenos Aires. They tell me that Chile is their favorite country in this area–so far.

For others, Uruguay is the favorite. And one of our most highly visible and beloved expats in Uruguay just abandoned Uruguay for Paraguay and says the only people who don’t like Paraguay are the people who have not seen it!

We aren’t real enthusiastic about Argentina right now—even though we now call Argentina home. We think serious economic problems lie immediately ahead and the powers that be are scrambling to keep currency from leaving the country. At the same time there are two ways to look at it.

Argentina faces economic crises periodically. We all know that it is likely to happen again. It’s almost like clockwork—about every ten years.  In 2004 in Argentina I saw men in business attire—suit and tie—eating out of a dumpster.  It is heart-rending.  Of course, as usual, Argentina came out of that crisis to yet another period of relative prosperity.  But now we are watching inflation carry prices of food and expenses higher and higher.  The signs of impending crisis are all around us.

But at the same time, if you have managed well in the good times, it may be a period of opportunity. As our Argentina attorney says, you do not buy in Argentina now, you wait for the crisis. There are some highly visible economic professionals waiting in the wings for Argentina’s financial crisis, saying that when it happens they will be buyers.  We know a U.S. transplanted businessman in Buenos Aires who has recently applied for citizenship because when the crisis comes, he plans to buy vacation rental apartments in the ski resort area of Patagonia. The Andes run along the border between Chile and Argentina and you can only buy close to the border if you are Argentine.

Judging from the past, when the crisis comes to Argentina it will probably produce buying opportunities in surrounding countries as well.  No one can predict for certain what will happen, but historically that is the record.  If you think that cycle is going to repeat, then now is the time to get positioned and familiar with your area of interest.  This is not to say that you cannot find good buys in real estate now. If you take time to look, you can. But we think it important to train ourselves to look for opportunities in crisis. Every new set of circumstances has the potential for opportunity. But when it comes to Argentina, right now our attitude is wait and see.

 

Now on to the CONEAT system of evaluating the fertility or potential productivity of land in Uruguay. We like this system very much. If you are considering farmland in Uruguay, and  you are interested in a particular parcel, you can get the parcel number from the owner, go to the CONEAT website, www.prenader.gub.uy/coneat, enter the parcel number at the bottom of the page, and get a great deal of information about that land.

The CONEAT evaluation will show different levels of fertility in different areas of the parcel. It may have several grades of soil. Naturally bottom land is likely to show more fertility than slopes. This is a numerical grading system whereby, depending on the number on that particular area of the land, it may be best used for cattle, row crops or forestry. Then they give an overall average.

The average index for soils is 100. Low fertility soils will have a lower average. An average of less than 80 is reckoned to be best for forestry, 80 to 120 is supposed best for grassland and cattle, and above 120 for row crops and more intensive farming. Of course these guidelines are not always followed, but this is a quick rundown of the recommendations of the CONEAT grading system.

These fertility averages also largely determine the prices charged per hectare. Of course prices vary with the economy, with proximity to a large town or the waterfront and other factors. The latest information we had was that land with an average  CONEAT rating above 120 could range up to $10,000 per hectare and a rating of less than 100 is likely to be priced around $2,000 per hectare. You will recall that one hectare is 2.47 acres.

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