Uruguay agriculture gets a Singapore sling after Kiwi retreat

MONTEVIDEO, Uruguay, Sept. 23 (UPI) -- Uruguay's dairy farming received a major boost after Singapore's Olam International gained control of NZ Farming Systems Uruguay in a move that would make Uruguayan dairy products accessible in Asia.

The acquisition was announced at the same time as Mercosur, Latin America's largest trade pact incorporating Uruguay, received renewed overtures from the European Union for an early signing of a new trade deal.


Both Singapore's entry and an expected Mercosur trade accord are a boon to Uruguay's agriculture and dairy farming industries, already seen as one of the most advanced in South America, analysts said.

Uruguay is the second smallest South American nation, after Suriname, but its largely urbanized 3.5 million population generates 1-10th of the country's gross domestic product in agriculture. Much of Uruguayan agricultural produce is exported.

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Analysts said the significance of the Olam deal could be in the transnational reputation of Uruguay's agriculture industries as sound investment.

President Jose Mujica has said he wants the country to do better rather than rest on its laurels.

Olam indicated it decided to get into Uruguay as part of its strategy to develop its presence in "low-cost" dairy farming regions to strengthen its market position in the dairy industry.

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NZ Farming Systems was set up by rural services company PGG Wrightson to develop its share of the dairy farming sector in Uruguay.

In its takeover offer Olam said NZ Farming Systems had consistently fallen short of targets including earnings forecasts and suggested major changes in the company's operational strategy. However, Olam executive Vivek Verma said Olam wouldn't be looking for a fundamental change in strategy in NZ Farming Systems Uruguay.

Analysts said Uruguay was currently on a winning streak with positive indicators for growth and governance.

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Latest tourism figures showed Uruguay's "life quality" tourism attracted 1.5 million people in the first eight months of 2010. The volume of visitors represents a 13 percent increase over comparable period in 2009 and a 20.2 percent rise in revenues.

The numbers of tourists arriving in Uruguay during the first eight months of 2010, compared to the same period a year ago, increased 13 percent and revenue jumped 20.2 percent, data released by the Ministry of Tourism said.

Tourism Minister Hector Lescano said Uruguay earned a net $1 billion in net tourism income last year.

Lescano said the tourism income growth indicated Uruguay wasn't affected by the global economic downturn. Further revenue growth would come with the promotion of cruise tourism, he added.


"Cruise tourism growth prospects are good but these are closely linked to infrastructure improvement, better services and preparing guides to cater for visitors," he said.

He said the promotion of cruises would be coordinated at Mercosur's highest level "to ensure the industry can effectively consolidate and keep growing."

Lescano cited reports that cruise visitors are returning to Uruguay "as tourists and even as investors."

Dairy industry sources said Uruguay's exports to Asia would likely boost interest in Uruguayan tourism in Asia as well.

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