Buying Farm Land in Uruguay and the Coneat
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.
Copyright September 2012 All rights reserved
Would like to ask what’s the ‘entrance fee’ of investing in Uruguay’s farmland and whether it’s a decent choice to invest in Uruguayan farmland ETF. Thanks!
Hi. Not sure what you mean by “entrance fee” of investing in Uruguay´s farmland. There is no fee. Anyone can buy real estate in Uruguay. Uruguay farmland is being recommended by a number of real estate investment advisers.
Hi Arlean, I just perused the new post regarding the BA Central (not so) Market. Great post. I watched the video, and was captivated by the music. Lovely! Anyway I saw this yesterday and it made me think of you http://www.zerohedge.com/news/2013-02-04/argentina-freezes-supermarket-prices-halt-soaring-inflation-chaos-follow
Stay well. Will be in UY in a few days. ; )
Many thanks, Andy, and welcome to Uruguay. Let us know what you think. 🙂
Hello Arlean,
Nice, thought provoking blog. I grew up in Argentina, and have spent almost every summer in Punta del Este, even while residing in the US, where I am now. Starting to think retirement, and Argentina, for the time being is out of the question… for all the reasons we all know.
Is there a resource, relating to agricultural land, that describes the best choices of crops or livestock? Haven’t yet checked out CONEAT, but will do, though I haven’t even begun to look at parcels.
Thanks,
Jan
Hi, Jan, good to hear from you. If you mean a resource to suggest what crops in general grow well in Uruguay, I know there is an organic farmers group that meets periodically but beyond that I don’t know. Maybe another reader does and can add information. I don’t know if you know about the forum at http://www.totaluruguay.com but if you go there, there is a farmer named Patrick who posts frequently and you might be able to ask him your questions. He seems to be VERY knowledgeable. I just included the CONEAT so that you would know where to look when doing your research for real estate you might consider buying. It appears to me that it would be helpful.
Arlean
The cone at page was throwing an error message for me. Perhaps it is my browser, or that I am out of the country? Could you give a sample pardon number just so I can try and load some data? Also is there a database similar to MLS in the states, that catalogs many listings?
Thanks Arlean,
Andy
If anyone else gets an error, please let us know. Andy, thanks. I don’t know if you are signed up for our email but I am going to email you the issue that discusses the CONEAT.