On April 23 fast track legislation entered Parliament in Uruguay, which may alter farmland investments in this country. Constitution allows the president to propose urgent laws, which pass automatically if not rejected or substituted after an abbreviated debate of no more than 90 days in Parliament. After assuming office on March 1 the new government of Luis Lacalle saw itself confronted with the corona-virus. Like all governments, it had to focus on confronting this situation. Due to this emergency, new legislation was delayed.

This proposal has some important provisions related to farmland investments:

·        It proposes to allow land ownership to public limited companies with bearer shares.

·        A change in the role of the Institute of Colonization in the purchase process of farmland.

·        Modification of the financial inclusion law for example to eliminate the obligation for salaries and pensions to be paid electronically (not in cash).

·        Import of gasoil will be facilitated which would lead to a significant reduction of expenses in Uruguayan farming.

·        Stricter control and sanctioning of robbery of livestock in rural areas by enforcing rural police.

Several measures that, once adopted, would lead to an improved profitability in farming and hence an increase of land value. Incentives for international investment in Uruguayan farmland!

Current legislation requires that the final beneficiary of farmland investment is known, either the physical person or the legal entity. There are only two exceptions: this is the case of non-primary production like agro-industry or agro-tourism and the second exception requires explicit approval for certain investors like publicly held enterprises. The approval procedures screens for rural development, sustainability, employment and decentralization. After passing the new fast track legislation, the approval procedure will no longer be required.

It is interesting to see how many enterprises got specific authorization to hold land in Uruguay.

Uruguayan government in the past 15 years approved more than 100 corporations to acquire farmland covering approx. 6 M hectares. The most well-known exceptions are timberland companies, such as (subsidiaries of) Montes del Plata, UPM, Weyerhauser and many other timberland trusts mainly from the US. Union Agriculture Group was another large investor that got permission to buy through different legal vehicles (most land already passed hands again). Local bio-ethanol company ALUR was an important company to get permission as well.

Multinationals also hold land in Uruguay, such as Calyx Agro, a subsidiary of Louis Dreyfus, which got permission to buy land and sold most of it. Adecoagro, co-owned by George Soros still owns farmland in Uruguay. As well as Danish company Ingleby, owning over 25.000 hectares in the southwest of Uruguay. Asset manager MSU (with funding from Dutch pension fund) got approval for acquisition of 22.264 hectares and mining company Aratirí (9.000 hectares in the area Durazno, Treinta y Tres, and Florida).

The last 15 years many Argentine buyers invested in Uruguay for different motives, such as wealth preservation but also farmers moving their operations from Argentina to Uruguay. Like the family Pérez Companc, with land in Río Negro, Soriano and Tacuarembó. A special mention deserves the argentine investor Alejandro Bulgheroni who set up several successful projects, like Bodega Garzón for production of wines, nuts and olive oils and Estancias del Lago for production of milk powder in Durazno. At some point, he owned up to 26.500 hectares in Uruguay. His focus is now on the two projects mentioned before.

New Zealand Farming Systems Uruguay, currently owned by OLAM, got green light through Telensy SA to continue its dairy operations on multiple farms in Uruguay, mainly in Florida and Rocha.

The odd one out is perhaps Uruguayan religious group ´Salesian Brothers´ adding a new investment of 4.930 hectares.

Also, several companies involved in cannabis production like International Cannabis Corporation and Tersum got permission in 2017. A trust named Tierras Irrigadas managed by Bearing Agro with backing from US investor, bought crop farms in Soriano in recent years.

Just like family office DO Investments from Munich through Fort Blue SA, which bought crop farms in Paysandú, Rio Negro and Soriano in the period 2017 to 2020.

It is impossible to describe all 100 authorizations of corporations buying farmland in Uruguay. Neither can one deduce how many corporations are international or domestic landowners since there is no distinction between the legal positions of these enterprises. It is estimated that approximately 40% of all agricultural land in Uruguay is held by corporations.

After the approval of this new legislation, farmland can be owned by LLC and LLP without prior approval procedures by authorities. This would mean a more rapid process to get started and it would save a lot on legal expenses.