Uruguay’s Timber Industry Has Room To Grow

Uruguay’s current timber production could not support a third wood pulp plant

According to a report by Uruguay’s Office of Livestock and Agriculture Policy (Opypa), Uruguay’s timber industry will produce an average of 10 million cubic meters of wood to be processed into pulp. Timber for solid wood production is estimated to average 4.2 million cubic meters of which 71% is expected to come from pine and 29% from eucalyptus.

According to Opypa’s analysis, Uruguay’s projected timber production is insufficient to supply a third wood pulp plant. The agency recommends expanding timber plantings into several areas of the country that are well suited for it.
Opypa claims Uruguay has 2.6 million hectares suitable for timber production which are currently deforested. The majority are located in Uruguay’s center east region. Uruguay’s other regions also have room to expand timber production. Opya estimates in each of Uruguay’s regions only half the land suitable for forestry is currently planted on.

The report states that in 2012, the timber industry employed 12,000 workers. Of which a significant portion are classified as skilled workers.

In 2009, 45% of workers in Uruguay’s silviculture industry were classified as skilled compared with 24% in the other sectors Opypa monitors (ranching, agriculture, dairy, and grain).

Between the last two Opya censuses the number of firms in Uruguay whose primary income is from forestry has decreased by 230. This decline is at least partially due to consolidation within the industry. The number of firms under 500 hectares decreased by 419 hectares while the number over 500 increased by 189.

Challenges for Uruguay’s Lumber Industry

One of the principal concerns raised by Opya’s report is whether Uruguay’s forestry firms can meet the growing demand from Uruguay’s wood pulp industry for raw materials.

Uruguay’s new Montes del Plata wood pulp plant is expected to double the country’s production capacity and its wood pulp exports. The projected timber supply through 2030 is sufficient for the two plants. A third plant would require an increase in timber production.

Adding value to wood exports is another challenge. Uruguay’s wood board production is small but has increased recently, between 2012 and 2013 the value of these exports rose by 16%.

This Uruguay Business Reports news article is a translation from the Uruguayan newspaper El Pais. The original article is available here. Uruguay Business Reports translation by Donovan Carberry. Image is from Uruguay’s El Pais.

Uruguay’s exports to Argentina continue to fall with no end in sight

Uruguay’s latest export data, released yesterday, showed a clear increase in Uruguay’s total exports. Soy remained Uruguay’s top export. However, the data also showed a clear decrease in exports to Argentina, which has maintained strong restrictions on imports despite the changes it has implemented to its macroeconomic policies.

Uruguay’s exports increased 7.8% in May over May 2013, according to data from the Instituto Uruguay XXI. Uruguay’s exports have increased 5% between January and May of 2014. The total value of Uruguay’s exports in May reached $1,128 million USD, $81 million USD more than in May 2013.

Brazil remained the number one destination for Uruguayan exports despite a .2% drop between January and May. China remained the second biggest destination for Uruguayan exports. Exports to China fell 14.4% since January. The Nueva Palmira free trade zone received the third most Uruguayan exports. Venezuela, following a 33.5% increase between January and May, was the fourth most significant destination.

Uruguayan exports to Uruguay fell 16.3% during the first five months of 2014 when compared to the same period in 2013. The value of Uruguayan exports to Argentina decreased $33 million USD over the same period. Argentina remains the fifth largest destination for Uruguayan exports.

With Argentina “something chronic” is happening, Álvaro Queijo, the president of Uruguay’s Exporter’s Union (UEU), told the newspaper El Observador. “On one side trade is not good and on the other, Argentina’s changes to the exchange rate at the end of January caused [Uruguayan exporters] to lose competitiveness”. “That the official exchange rate has gone from $ 6 (Argentinean Pesos) to $8 which has changed the numbers a little. Whats more, the restrictions have not changed, they have remained the same; Argentina’s industry is very reluctant to buy imports”, explained Quejio.

Quejio does not believe that there will be any significant changes in the short-term to produce an opening for trade or an improvement in Argentina’s macroeconomic conditions. “This is a process that has been going on for some time, for some two or three years, with a continuing deterioration of exports to this country. If we compare it to 2012 the drop is bigger and if we use 2011 the decrease is even more pronounced”.

Quejio reported that the sectors most affected have been clothing, graphics, chemicals and plastics. He added that Brazilian demand does not make up for the fall in sales to Argentina. The decrease in exports to China, nearly 15%, can be attributed to the significant increase in exports to the Nueva Palmira free trade zone as most products are usually shipped from there to China.

Soy Stays In Front

Soy remained Uruguay’s principal export in May. Sales to abroad increased 14.7% over May of 2013 and represented 39% of Uruguay’s total exports in May. “Despite decreasing 2.8% over sales in May 2013, frozen beef was Uruguay’s second biggest export, making 9.3% of the total” reported the Uruguay XXI institute. Concentrated milk came in third with 4.9% of the total. Exports of live cattle saw the biggest increase in May. Sales of live cattle in May of 2013 did not even reach $300,ooo USD, in May of 2014 they topped $15 million USD.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El Observador. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

The Value of Uruguay’s Beef Exports Increased 3.6% During The First Five Months of 2014

The average value of Uruguay’s beef exports during the first five months of 2014 increased 3.6% compared to the same period in 2013, reaching a an average value of $3,951 USD per ton of meat from the front of the carcass and an average value of $3,812 USD per ton of meat from the back half.

Beef exports fell 5% as a proportion of Uruguay’s foreign currency inflows compared to the first five months of 2013, according to Uruguay’s National Meat Institute (INAC).

The volume of meat exports fell 9% amounting to 142,624 tons.

China held its position as the leading destination for Uruguayan beef. Uruguay exported 37,479 tons of beef to China, a 10.6% increase in volume. The value of Uruguay’s 2014 beef exports to China has reached $109.7 million USD so far, an increase of 7.8% over the same period in 2013.

Beef exports to the European Union continued to bring in more foreign currency than any other destination. So far in 2014 they have earned Uruguay $160.3 million USD, that is a 9.7% increase of the amount generated between January and May of 2013.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El Observador by Hugo Ocampo. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Alur forms strategic partnership with Parque Sur to source biofuel ingredients from central Uruguay

Alcoholes del Uruguay (ALUR) is a subsidiary of Uruguay’s state owned oil company ANCAP. It produces biofuels, animal feed and other agro-industrial projects.

Tomorrow Uruguay’s state-run agro-industrial company, Alcoholes de Uruguay (Alur), and Parque Sur will sign a public-private strategic agreement to stimulate agricultural production and in center of the country. Alur is attempting to secur a supply of grain for when it opens a second ethanol plant next year.

In a conversation with the Uruguayan newspaper El Observador,  the executive director of Alur, Leonardo De León, said that the agreement aims to transform Parque Sur into a “important supplier” of grain for all of Alur’s different biofuel production processes, including its two biodiesel plants (which use sunflower, canola, and soy) and the ethanol plant (sorghum) it has under construction in Paysandú. “The idea is to develop an agricultural basin where Alur can get the raw materials that it needs for its industrial processes”, explained De León.

Additionally, Parque Sur will be a distributor of the cattle feed that Alur produces and will also store grains for Alur in its industrial park. “This is another advance for the policy of public-private alliances that Alur is creating in different parts of the country” said De León.

As part of the agreement Parque Sur will take over negotiating different planting contracts with grain producers and arranging grain shipments.

Parque Sur is a two-year-old agro-industrial park in Fray Marcos. Its director Claudio Kröger told the Uruguayan newspaper El Observador it expects Uruguay’s industry ministry to grant official recognition as an industrial park soon.

The property features all basic services such as fiber optics, electricity, running water and truck parking. There are four business operating inside the park. One is Uruguay’s principal milk producer, New Zealand Farming System Uruguay (NZFSU) which has built a feed plant that supplies 50,000 cows. The other three businesses in Parque Sur are transportation companies. Additionally, the local government designated two hectares inside the park for innovation and to promote new industrial businesses.

Kröger explained that the strategic alliance between Parque Sur and Alur will expand agriculture in the Santa Lucía river valley, Lavalleja, Canelones, San José. “The idea is to turn this area of the country into a surplus producer of animal feed”, he said. The director of Parque Sur indicated that their cooperation with Alur will involve the supplying grain to the new ethanol plant Alur is constructing in Paysandú. Additionally, they will construct a 30,000 ton grain storage facility in Parque Sur.

Alur is a subsidiary of Uruguay’s state oil company Ancap. Last year, it produced 45,000 tons of biodiesel.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El Observador. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Uruguayan Citrus producers increase plantings by 8% after gaining access to the U.S. market

Uruguay’s citrus producers are increasing plantings by 8%

According to data from Uruguay’s Ministry of Livestock, Agriculture and Fish (MGAP) between 2013 and 2015 Uruguay’s citrus producers intend increase the amount of citrus trees under cultivation by 571,537 plants.

That amount represents an 8% increase over current plantings which total 7,181,902. Tangerines will account for 44% of the new plantings, lemons will be 31%, and oranges will be 25%.

Uruguayan producers have increased plantings primarily  because they have just received access to the United States market, a change which was announced in a July 10, 2013 press conference.

“Very probably, this will involve the need to reorganize the fields to adapt to the demands of the new market as several agents linked to the citrus industry have already expressed”, MGAP’s official statement explained.

The opening of the U.S. market is something the industry has been waiting 20 years for. Uruguay producers will enter the U.S. market on an equal footing with producers from South Africa, and Chile. Uruguayan producers currently face much higher tariffs then producers from South Africa or Chile when exporting to Europe, the principal destination for Uruguayan citrus exports.

This Uruguayan Business Reports news article is a summarized translation of a news article that appeared in the Uruguayan newspaper El Observador. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Soy and Grain exports from Nueva Palmira Port are experiencing 30 day delays

Map showing Nueva Palmira, Uruguay’s principal port for soy exports. Nueva Palmira is now experiencing delays of up to 30 days to load soy exports

Soy and grain cargo going through Nueva Palmira is experiencing significant delays in loading. In some cases cargo has been delayed 30 days.

The president of Uruguay’s National Port Administration (ANP), Alberto Díaz, told the Uruguayan newspaper El País that theses delays are caused by the timing of ships arriving into Nueva Palimra port to load merchandise. “The sale of grain for export has unique characteristics”, said Díaz.

He explained that producers sell their grains in July, for example, but the boats charged with transporting them don’t arrive until the end of the month. “The seller sells their produce but the boat arrives in the last few days of the month. The seller is inside the deadline to comply with the request, but it generates a delay in the cargo for several weeks.” Díaz said. Regionally these delays are being seen mainly in Brazilian ports but also in Argentina.

“What we should do is try to improve access and cut down the time frames and find some benefits for the export sector” Díaz added. The ANP, which he heads, is in charge of coordinating all aspects of the supply chain passing through the port.

ANP is studying the possibility of loading merchandise at the floating station Punta del Arenal, located in the River Uruguay north of Nueva Palmira, to bypass the delays. ANP would only permit this option in the case of significant delays. If there weren’t delays at Nueva Palimra and exporters still wanted to use the floating station, they would face additional charges.

The majority of the grain being exported through Nueva Palmira is soy. All these exports are connected which is an important aspect of the harvest said Díaz. “Everyone wants to be the first to ship because that is when it [soy] has the highest value, later on the market begins to change and it trades at a lower price” Díaz explained.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Uruguay’s meat processors raise prices for third consecutive week

Following a change in the price of cattle, the two meat processors that dominate the Uruguayan market raised the price of beef to butchers between $3 pesos and $5 pesos per kg and offal meat between $3 pesos and $14 pesos per kg.

It is the third consecutive week that the domestic price of beef has risen in Uruguay. Normally the smaller meat-packing plants align their prices with the two that major ones. According to butchers the price has risen around 10% this year and half a cow is at the highest price in years, round $94 UYU per kg.

The new prices include a rise of $3 UYU per kg for bone cuts including steaks and $5 UYU per kg for pre-packaged ground beef. The organ that saw the greatest increase was gizzards which rose by $14 UYU per kg.

“This new increase could produce resentment among beef consumers; the people are going to notice” Herbert Falero, the vice-president of Uruguay’s Union of Meat Venders (UVC) told the newspaper El País.

“The new prices are in effect starting today” he said and signaled that butchers could not assume the costs. Previous price increases have been passed on to consumers and Uruguay’s consumers are turning increasingly to chicken and pork.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

9,000 calves approved for export from Uruguay to Tunisia

Problems exporting to Turkey, the traditional market for live calves born and raised in Uruguay (both castrated and un-castrated), remain but interest is growing from other destinations.

Uruguayan cattle ready for export

Uruguay’s MGAP (Ministry of Livestock, Agriculture and Fish) has approved the export of around 9,000 calves to Tunisia. Those calves had been quarantined as part of the complications exporting to Turkey.

“The permission to export 9,000 calves to Tunsia is welcome, even more so given the moment we are in” said Gastón Fernández, the secretary of the Union of Live Cattle exporters. “It is a good signal for the breeding sector and live cattle exports which has to always be open”

MGAP’s animal health division, is studying a proposal from Turkey’s veterinarians which calls for an additional test prior to export as well as a prolongation of the quarantine period which is already around 20 days. A longer quarantine would raise the costs on Uruguay’s exporters whose competitiveness has already been hurt by high cattle prices from producers.

Nevertheless Uruguayan businesses are still receiving requests from various countries, signaling there is strong demand for live cattle.

“We have been in contact with Algeria, Tunisia, Saudi Arabia, Russia and have received inquiries from France and Spain, European Union countries that we cannot do business with because Uruguay is free of foot and mouth disease [only] with vaccination. There is demand” said Mr. Fernandez

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Rumors that JBS will acquire Marfrig’s meat packing plants trigger official comments

Rumors in the Brazilian press that Brazilian food processing giant JBS will acquire four meat processing plants in Uruguay from competitor Marfrig prompted President José Mujica to warn his cabinet ministers about possible over consolidation within the meat-packing industry in Uruguay.

Uruguay’s Minster of Labor Eduardo Brenta, who relayed President Mujica’s comments on consolidation in Uruguay’s meat packing industry

The minister of Labor, Eduardo Brenta, told a Uruguayan morning radio program that President Mujica had proposed looking into how any new deal between JBS and Marfrig would affect competition within the Uruguayan meat-packing industry before letting it go forward. JBS has already acquired Marfrig’s Uruguayan tannery Zenda.

“If this (new deal) happened, this group (JBS) would be in a dominant position in the Uruguayan meat market” said Brenta. He explained that the possible transaction’s impact on negotiations between Uruguay’s meat producers and meat processors provoked President Mujica’s concern.

If JBS adds the four Marfig plants in Uruguay to its own meat-packing business in the country (Canelones) it will become the principal meat packer in Uruguay with 33% of the marketplace. In a distant second place would be the Brazilian company Minerva with 8.4% according to market data from INAC.

Brenta said the that the government first intends to talk and negotiate with the businesses involved in the deal (Mafrig and JBS) to achieve the optimal result. Should that fail the government will consider whether the Defense and Promotion of Competition law should be invoked.

This Uruguay Business Reports news article is a translation of a newspaper story that appeared in the Uruguayan newspaper El Observador. The original news article is available here. Uruguay Business Reports news translation by Donovan Carberry

Uruguay will see a siginificant drop in farmland dedicated to rice production

In Uruguay’s north and east, the principal areas for rice cultivation, low water reserves are forcing producers to sow less rice. According to early estimates, 40,000 less hectares will be dedicated to rice production than in 2011.

As of today, the average rice irrigation reservoir is at only 50% capacity. In the area around Artigas, as well as in practically all of provinces of Treinta y Tres and Rocha, the problem is even more severe. In those areas reservoirs are at only 40% capacity.

Hernán Zorrilla, the vice-president of the Association of Rice Culitvators (ACA), explained that the ACA expects only 180,000 hectares to be designated for rice cultivation (a decrease of 18%). Sowing has already begun in the north and will start within a few days in Uruguay’s east.

Despite the low reservoirs, Romulo Gamarra, director of the ACA, said heavy rains in the next month would create a significant problem for sowing.

He also predicted that mostly commonly planted varieties of rice would be INIA Tacuarí, which has a shorter growing cycle, and INIA Olimar which is often planted during water shortages.

“The area [under cultivation] will decrease, the question is by how much. Every producer is going over their accounts to figure out how much to plant outside the optimum planting dates [up to the end of October]. Before rice producers sowed everything that water reserves would allow, but with the current costs you have to be much more careful and work only the fields that produce good yields” said Gamarra.

According to the ACA, the cost of sowing one hectare during the last harvest was more than $2,012 USD, which is near a record high. High sowing costs left many producers in the red. ACA says these costs combined with producers switching to soy beans, which have a higher profit margin, have been the greatest reason for Uruguay’s declining rice production.

This Uruguay Business Report article is a translation of an article that appeared in the Uruguayan newspaper El País. The original article is available here in Spanish. Uruguay Business Reports translation by Donovan Carberry.