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.

Uruguay’s exports to Mercosur plunged during the first eight months of 2013

Despite the theoretical benefits of the customs union, Uruguay’s exports to Mercosur have declined dramatically this year

During the first eight months of 2013, Uruguay’s exports to Argentina fell 5.6%, exports to Venezuela fell 15.1% and exports to Paraguay fell 9.2% compared to the first eight months of 2012. Although Uruguay’s exports to Brazil continued to grow, they rose only .1%.

Put together, Uruguay’s exports to Mercosur from January to August 2013 fell 3.9% compared to 2012 and totaled $1.748 billion USD. Exports to non-Mercosur countries rose 4.8% and totaled $6.478 billion USD.

The executive secretary of Uruguay’s Exporter’s Union, Teresa Aishemberg, told the Uruguayan newspaper El País that the organization does not expect positive changes in Argentina, Brazil or Venezuela this year. However, they did see an increase in exports to Paraguay during August.

Aishemberg said that the situation with Argentina cannot improve as long as President Cristina Fernández Kirchner’s government maintains the trade barriers it has imposed. “Evidently we have to look to other markets, but not all products are competitive outside the region” Aishemberg said.

The economist Pablo Moya from the consulting firm Oikos agreed with Aishemberg about the situation in Argentina. “There is a real loss of the competitiveness that Uruguay always had in comparison with Argentina beyond the increased costs”, he said.

Moya does not expect any changes in Argentina’s trade policies under the current president. He was more optimistic about the situation with Brazil.  “With them there is a greater possibility that they will reverse and again be a market demanding Uruguayan products, a strong destination for our sales”, he said.

Nevertheless, Moya does not expect significant changes in regional trade soon. “Significant change with Argentina and with Brazil would be slow, the outlook is not reversible in the short-term”, Moya said. Given this situation Moya also expressed the need for Uruguayan exporters to look toward other markets but didn’t negate the difficulty of doing that. “Many [exporters] that want to trade outside the region aren’t able to. They lose competitiveness.” he said.

“For a long time exporters have been looking toward the rest of the world, principally because of the tariff barriers and the bureaucratic obstacles that they are applying, while in theory the free circulation of goods and service within Mercosur generates advantages”, added Moya.

With a prediction that conditions will not improve in the short-term, exporters are demanding the government apply a series of measures to confront Uruguay’s loss of competitiveness.

Declining competitiveness, customs procedures, and soybeans to the “rescue”

Teresa Aishemberg emphasized to El Pais that the Exporter’s Union called on the government to take several measures to improve Uruguay’s competitiveness. These measures include a reduction in employer contributions and or improvements in export pre-financing.

“What’s more there are hidden costs. There are delays in the procedures and logistics aspects generate financial costs to businesses when these procedures slow down”, said Aishemberg.

The export sector also called for cheaper energy and said that Uruguay’s energy costs are not very competitive compared to the region.

Uruguay’s five principal business chambers (the chambers of Industry, Trade, Commercial and the Rural Federation and Rural Association) released a report a few weeks ago on Uruguay’s declining competitiveness.

The report spared no criticism of the government and annoyed the executive branch. Although Uruguay’s Exporter’s Union has called for measures to address the country’s declining competitiveness, it has distanced itself from the report and emphasized that the Union was not involved with the report.

Up to now, what is “rescuing” Uruguay’s export numbers is soybeans. Soy bean exports grew 32.9% in the first 8 months of 2013 compared to 2012 and totaled $1.814 billon USD.  Out of every $100 USD Uruguay has exported in 2013, $28 USD has been soybeans.

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 Nueva Palmira port saw 43% increase in cargo moved during the first seven months of 2013

Port of Nueva Palmira (Photo from Uruguay’s National Port Administration

The head of the Nueva Palmira Port, Flavio Vaccarezza reported that from January to July the port moved 2,000,000 tons compared to 1,400,000 tons during the same period in 2012, a 43% increase.

Vaccarezza said that the port recently added a 200 meter mooring front. He explained that it is a “riverside quay which allows us to attend to a higher number of barges and, as a consequence, to satisfy the growth in demand for services that accounts for the increase in tonnage moved”.

The port also recently added an additional 22,500 square meters for merchandise storage which also allows it to receive more ships.

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

Uruguay and United States sign an agreement to modernize customs procedures

Uruguay’s Economy Minister Fernando Lorenzo and United States Under Secretary Francisco Sánchez signing the customs agreement

Francisco Sánchez, U.S. Under Secretary of Commerce for international trade, met with Uruguayan President Jose Mujica to sign an agreement to improve the systems used by customs and border control.

Diego Cánepa, Uruguay’s Presidential prosecretary, said in the press conference following the signing that the agreement aims to solve “practical and technical problems” in the customs and border control systems.

“Many times there are agreements, but when they are put into practice practical problems arise” those old problems Cánepa explained will be corrected by this new agreement.

Sánchez said that President Mujica talked about the “importance of finding ways to lower trade barriers” and explained that the agreement “is one way” of doing that and “improving the system”.

Sánchez went on to say “We are talking about how to improve trade, not only between Uruguay and the United States, but regionally .. and of the need to use all the mechanisms, including Mercosur, to have more trade based in the agreements and the treaties and the systems that exist”.

Cánepa reported that although President Mujica’s visit to Washington to meet with President Obama, has been confirmed, the date still has not been decided. The trip will be take place sometime in the “next few weeks”.

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

The Uruguayan peso falls to its lowest value against the dollar in four years

On August 22, 2013 Uruguay’s exchange rate hit 22.43 UYU to the dollar, the lowest the Uruguayan peso has been against the dollar in almost four years.

The dollar rose 1.84% against the Uruguayan peso on August 22, after having already risen 1.97% on Wednesday. Wednesday’s increase was the  biggest single day increase in nearly three months.

Uruguay’s vice-president, Danilo Astori commented yesterday in the Uruguayan city of Mercedes that “there is no reason to expect a drop in the dollar for the rest of the year”.

Yesterday, the average interbank exchange rate was 22.43 UYU to the dollar, the lowest the Uruguayan peso has been since September 2, 2009.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El Pais. 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 News Brief: Uruguay’s exports fell while imports rose in July

Uruguay’s exports fell 2.3% in July 2013 compared to the year before, for a total of $1.029 billion USD reported the Uruguay XXI Institute, Uruguay’s export promotion agency. Imports rose 14.3% in July over last year to reach $841 million USD.

Uruguay’s exports have increased 4.5% this year, up $5.6 billion. Imports, excluding petrochemicals have increased by $5.3 billion USD.

This Uruguayan Business Reports news brief 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.