Economics and Agricultural Markets in Uruguay
Uruguay is a small South American nation with a total territory of 176.000 square kilometers, which is about the same size as the state of Washington. Located on the southern Atlantic, Uruguay is known for its temperate and subtropical climate, good natural irrigation, hilly landscape, and fertile land. With a total population of little over 3 million citizens, Uruguay is an exemplar Latin American nation in terms of sustainable development and strong democratic institutions. The country’s annual gross domestic product (GDP) of approximately US$70 billion is divided into 7% agriculture, 26% manufacturing, and 67% services. However, the agriculture industry utilizes about 87% of the national territory, while another 10% is forested. Similarly, the Uruguayan agricultural industry employs 13% of the national labor force, while manufacturing employs about 14% and services employ another 73%.
In terms of natural resources and geography, Uruguay has arable land, grasslands, hydropower, minerals, and fish. Likewise, within the manufacturing industry, Uruguay produces food & beverages, electrical machinery, transportation equipment, petroleum products, textiles, and chemicals. Within the agricultural industry, Uruguay’s main products are soybeans, rice, wheat, beef, dairy products, fish, lumber, and cellulose. This article explores the status of the economy and the agriculture industry in Uruguay.
Economics and Agricultural Markets in Uruguay
In terms of trade, Uruguay’s most important partners are neighboring Common Market of the South (Mercosur) members Brazil and Argentina as well as the United States and China. Throughout the 21st century, Uruguay’s economic growth has been remarkably positive, driven mainly by favorable commodity prices in international export markets. However, the country has also experienced significant economic slowdowns whenever international commodity prices have decreased substantially, particularly within the agricultural exports sector.
Uruguay’s population is mostly urban, concentrated mainly throughout the southern half of the country near the Atlantic coastline and major urban centers, including the capital Montevideo. This leaves the majority of the national territory, the Pampa prairies and plains, as forested and agricultural terrains. The Uruguayan agricultural industry counts with some 50.000 medium and large-scale operations nationwide, employing well over 100.000 people on a permanent or seasonal basis. During the last decade, the agricultural industry has experienced substantial growth in the cereals and grains sector, particularly soybeans for sale to East Asian markets. In fact, the soybean cultivation boom in Uruguay has taken land from other major crops produced in the country such as rice, wheat, and corn as well as cattle operations. Currently, meat and soybeans are the country’s largest export goods, each accounting for more than 15% of Uruguay’s sales to international markets, respectively.
Finally, cattle, sheep, and dairy operations remain as the largest sector within Uruguay’s agriculture industry. Today, Uruguay devotes approximately 12 million hectares to cattle and sheep operations as well as 1 million hectares to dairy production. This stands in stark contrast to the 2 million hectares devoted to grain and oilseed cultivation. Similarly, recent estimates place Uruguay’s head of cattle count above 12 million and the domestic sheep count at about 10 million.