Irrigation increases productivity in 30% representing a margin increase of around 90%
Implying at the same time, a 30% land appreciation due to the increase in productivity. Moreover, irrigation stabilizes yields creating a more predictable cash flow in long dry periods. We call “water arbitrage” to the difference of productivity between farm with and without irrigation capacity, which increases the value.
In a world with a food demand in constant evolution and increase, markets present opportunities in the grains market.
· Growing world population
· Socio-economic transformation, growing middle class in emerging markets like China or India
· Food diet modification based on greater acquisition capacity towards higher protein products
· With higher income a person consumes more meat Increase of calories consumed average per capita in the world:
· 1964/66 : 2,000 calories per day
· 1997/99 : 2,600 calories per day
· 2030: 3,000 calories per day Increasing demand of bio-fuels contributes to an increasing demand of grain
RESISTANCE TO CRISIS
Agriculture production has resisted to the latest financial crisis, demonstrating to be a safe business. New business players, growing population and limited natural resources operate as insufficient elements.
· Increase in food prices as a consequence of world growing population and cultural change.
· Land prices increase, as it derivatives, based on the conscience of limited resources to face a growing demand.
Source: NCREIF Farm land and Office Index, S&P 500 Index; Lehman US Bond Index., 2009.
INVEST IN URUGUAY
Uruguay business environment:
· Equal treatment to local and foreign investors.
· Absence of extraordinary requirement to companies’ formation.
· No amount limit for foreign participation in an investment.
· Capital repatriation granted, available at any time with no restrictions.
· Machinery importation has favorable tax treatment, eventually
with 0% tax policies. Technology investment generates tax credit.
· No currency conversion restriction. Transactions can be held in USD
with no Price control or limitations.