South America’sAgro-Giant Mercosur

Exhibitor

Agr. Eng. Tabaré AguerreMinister of Livestock, Agriculture and Fishery,

Uruguay

Global Forum for Food and Agriculture Berlin 2011

Content

• I. MERCOSUR:  the world´s greatest  agricultural potential.

• II. Uruguay:  the smaller and more agriculture specialized country in MERCOSUR. 

• III. Uruguay as “pilot country” in agricultural policies related with agricultural growth, social integration and environmental sustainability

• IV Summary and forecast

I. MERCOSUR: the world´s greatest agricultural potential

MERCOSUR

BRAZILPARAGUAY

URUGUAYARGENTINA

Inhabitants Area Density

Millions Ha (millions) Inhab/Km2

Argentina 41.3 273.6 15.1

Brazil 201.1 845.9 23.8

Paraguay 6.4 39.7 16.1

Uruguay 3.3 17.5 18.9

Sub total Mercosur 252.1 1,176.7 21.4

World 6852.5 12,560 54.5

MERCOSUR

Human Development Index

High Human Development HDI World ranking

Argentina .0775 46

Uruguay .0765 52

Brazil .0699 73

Medium Human Development

Paraguay .0640 96

Land with rainfed crop production potential

0

10

20

30

40

50

60

3845

9

52 52

26 27 2231

Share of land suitable (%)

Mercosur: increasing specialization in agriculturalproduction (% of export value)

Agricultural rawmatters

Natural resourcesbased manufactures Total

1998/1999 26,7 18,4 45,1

2001/2002 27,6 18,6 46,2

2005/2006 35,1 19,3 54,4

2008/2009 38,8 20,2 59.0

Source: CEPAL

Mercosur: market share (I)

Volume Value

Soybeans 51% 49%

Soybeans oil 69% 66%

Sunflower 26% 24%

Expellers 49% 50%

Mercosur: market share (II)

Volume Value

Wheat 8% 7%

Rice 6% 5%

Maize 22% 19%

Cotton 9% 8%

Beef meat 27% 24%

Poultry 29% 27%

II. Uruguay: the smaller and more agriculture specialized country in MERCOSUR

URUGUAY

Uruguay: the best income distribution country in LA

Features of Uruguay

• Strong political and social stability

• High economic growth and investments

• The highest internet and PC coverage among LA countries

• New and sucessfull investment promotion regime 

Uruguay: political and social stability (1)15

Ranking Uruguay in South America

Low Corruption(Transparencia Internacional 2010) 2º

Democracy Index(The Economist Intelligence Unit 2010) 1º

Economic Freedom(Heritage Foundation 2010) 2º

Quality of life(Mercer Eco-City Ranking 2010) 1º

Low Cost of living(Mercer Cost of Living City Ranking 2010) 4º

Uruguay: outstanding economicperformance

16

5,0%

7,5%

4,6%

7,6%

8,9%

2,9%

8,5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2004 2005 2006 2007 2008 2009 2010 E

Tasa compuesta de crecimiento anual (2004–2009): 6,1%

Fuentes: Banco Central del Uruguay; 2010E: FMI, World Economic Outlook, octubre 2010

1,7%2,6%2,8%3,3%4,0%5,0%5,0%

7,5%7,5%8,3%8,5%9,7%10,5%

0% 10% 20%

EurozonaEE.UU.Japón

AlemaniaRusiaChile

MéxicoBrasil

ArgentinaPerú

UruguayIndiaChina

Tasa de crecimiento real del PIB

Fuente: FMI, World Economic Outlook, octubre 2010

Tasa de crecimiento esperada del PIB en 2010

The foreign investment is increasing sharply

Source: BCU

Fast growth of exports18

Uruguayan exports(US$, millons)

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

2002 2003 2004 2005 2006 2007 2008 2009

Servicios

Bienes

Fuente: BCU y TradeMap

Market diversification (2010)19

MERCOSUR32%

Asia19%

Unión  Europea15%

Resto  de  América  del  Sur

13%

Resto  de  Europa7%

América  del  Norte7%

África5%

América  Central  y  el  Caribe

2%

Fuente: Dirección Nacional de Aduanas 

Modern infrastructure

• Montevideo´s port is a regional  “hub” for the Mercosur countries

• The most dense road network in LA countries

• 2009: new airport

• Very trustable electricity supply (mostly from renewable sources)

20Quality of

electricity system(ranking)

EE.UU. 23

Irlanda 25

Chile 30

España 36

Uruguay 37Hungría 46

Italia 47

N. Zelanda 56

Brasil 63

Argentina 93Fuente: Foro Económico Mundial, Reporte de Competitividad Global 2010‐11

High internet and telephone coverage

Movile phoneusers

Fixed telephonyusers Internet users Internet access in

schoolsRank Rank Rank Rank

Argentina 25 Costa Rica 38 Uruguay 41 Uruguay 26

Uruguay 44 Uruguay 48 Colombia 47 Chile 42

Chile 64 Argentina 53 Brasil 57 Costa Rica 64

Colombia 74 Brasil 62 Costa Rica 66 Brasil 72

Brasil 76 Chile 63 Chile 68 Colombia 88

México 93 México 72 Argentina 74 México 89

Costa Rica 119 Colombia 77 México 85 Argentina 111

Source: World Economic Forum, Global Competitiviness Report 2010‐11

• First country in the world to give one laptop to all the public students

• Computers delivered: 380.000

• 220.000 families  (half of them are  poor people) reached.

One lapton per child (OLPC, Plan Ceibal)

Prepearing children to overcome the technologial gaps

1

The average agriculture growth in Uruguay was 4.1%, (2001 – 2009)

Evolution of GDP in Uruguay(2005 constant currency)

77%

23%

INTENSIVE NATURAL RESOURCE SECTORS

OTHERS

58%

42%

Increasing level of the “Intensive Natural Resources Sectors” in 

the Uruguayan exports

2009

1985export value (%)

export value (%)

Exports:  5,386 thousand million dollars

71,40%

28,60%

Agropecuarias No agropecuarias

Agricultural exports

III. Uruguay as “pilot country” in agricultural policies related with agricultural growth, social integration and environmental sustainability

Main agricultural policies

• Natural Resourse conservation

• Adaptation to Climate Change

• National System of Agricultural Information

• National System of Agricultural Innovation

• Rural Development 

• International marketing policies to promote the agricultural diferentiation of uruguayan products and processes

Actual erosion Degradation risk

Fuente: PAN – MGAP, 2005

Main droughts occurring in the last100 years

1918 1942 1963 1988

Intensity of summer dry season(% water available in soils, January)

2000 2001 2002 2004 2005

2006 2007 2008 2009 2010

Strategy for CC adaptation

• Five basic issues:– Changes in management, technologies and infrastruture (mainly in water management)

– Land planning, 

– Research and Development

– Information and decision support systems 

– Climate Insurance for risk transfer

Challenges for agriculture in Uruguay

• Sustainable use of natural resources (water, soils, biodiversity) and protection of ecosystems services.

• Adaptation and mitigation of climate change

• Inclusive rural development

• Competitiviness (natural resources + education, institutions, environmental added value)  

Climate change threatens food security at domestic but also at international level: Uruguay exports 5 times the food it consumes and has the

potential to produce 20 times or even more!!

• World population is growing fast and food demand will increase by 70% in 2050.

• The combat of CC cannot be done at the expense of food production.

Surface water

damming

Uruguay is developing Carbon Footprint studies

• Uruguay aims at offering products for climate-responsible consumers

• Using Life Cycle Analysis 3 main value chains are already being studied:

– Red meat (cattle and sheep)– Rice– Dairy products

– Other products will be incorporated this year.

Beef cattle traceability

“Triple win” strategy is possible

1. Producing more food, ensuring food security and reducing poverty,

2. Minimizing net greenhouse gases emissions3. Building resiliencie and reducing vulnerabilities

to CC, in particular to extreme events.

Adaptation toCC is crucial

for foodsecurity.

Nationalstrategy:

– Innovative Insurances (Index insurances) as a safety net.

– Financing and Incentives for good practices and investments at farm level

– Information and knowledge for better decision making (R+D, extension services, early warning, etc.)

– Good (multi-level) governance.

– Synergies with mitigation (e.g. agroforestry).

– Monitoring and lessons for continuos improving

Linking science with policies

• INIA• IRI (Columbia University), • Resilience Alliance,• Global Alliance•

• Promotion of innovation for adaptation and mitigation of CC : ANII

Linking policies with sources of funds in Uruguay

• Uruguay: first latinamerican country to have a project to presented to be approved by the Kyoto Protocol’s Adaptation Fund.

• Uruguay also has projects on Climate Change and Rural Development with:

– World Bank, – IBD – GEF

Uruguay aims at producing more high quality food reducing the C footprint.

Climate change – food security and fair trade are connected.

The core idea is to promote theeco-efficiency of processes

Uruguay is initiating an experience as a Pilot Country for a Green

Agriculture

• Institutional stability• Education• “Climate for investment”• Rich natural resources to be protected.• Medim scale, compatible with pilot

experiences

IV Summary and forecast

In summary…(1)

• Mercosur countries have been increasing their agricultural international specialization

• It is the world´s region with the greatest agricultural potential with vast natural resources availability

• Mercosur countries are increasing the level of foreing direct investment in the agricultural and agroindustrial sectors

• Uruguay has very good conditions (at political and social level) to deep the implementation of modern agricultural policies in order to promote:

– Natural Resources Conservation– Climate Change Adaptation– Rural Development

– Agricultural Systems of Information

– Innovation policies for the quality of products and processes

– International marketing policies

In summary…(2)

World wide uruguayan exportacions• Uruguay occupies the 7th place in soy bean exports.• 6th place in rice exports.• 6th place in beef meat. • 3th in lamb meat.• 2nd in wool.• 4th in South Africa.• 1st player in the world cup.

¡¡¡Thank you!!!

URUGUAY

Exhibitor

Agr. Eng. Tabaré AguerreMinister of Livestock, Agriculture and Fishery,

Uruguay