PREGUNTAS Y RESPUESTAS
How is the soil classified in Uruguay?
In Uruguay the land’s productivity is measured by different Coneat Indexes which are assigned to the different soils according to their characteristics and potential productivity. Different soils are clearly identified throughout the different regions of the country, these being suitable for agriculture, cattle farming or forestry; however within the same ranch one may come across different types of soil. The Coneat Index allows us to know beforehand which activities may be carried out in a particular farm. Land with a Coneat Index less than 80 is mainly suitable for forestry. Land with a Coneat Index between 80 and 120 is mainly suitable for cattle breeding. Land with a Coneat Index higher than 120 is mainly suitable for agriculture.
What is the price of the hectare?
Basically, what determines the land’s value is the previously mentioned Coneat Index. But there are other factors such as the property’s extension, location, proximity to highways and towns, its infrastructure and the type of production the farm develops; which will establish the final price value. As with any real estate we might come across states which are below or above the average asking price. For example the price of a farm with a Coneat Index below 80 will vary between U$ 500 and 2 000 American dollars per hectare. The price will vary from U$ 2 000 to 3 500 American dollars per hectare for a farm with a Coneat Index which averages between 80 and 120. Furthermore a farm with a Coneat Index which is above 120 can be worth U$ 3 500 and 7 000 American dollars per hectare.
What is the leasing price of the land?
All the factors discussed in the previous question must be taken into account so as to set the leasing price. Consider this: An agricultural establishment with a Coneat Index ranging from 120 to 140, good location, average extension (700 hectares) could be leased for about U$ 140 to 200 American dollars per hectare a year. A state with a Coneat Index over 140 would be leased at U$ 200 to 400 American dollars per hectare a year.
How has the price of the land evolved?
Truth be told, the domestic market is still hectic which means the prices are continuously rising favoring land owners. Thus they see how land is being past onto newcomers as well as the global demand which inexorably affects the domestic market and the prices are adjusted. Once again taking our previous model farm (i.e. an agricultural establishment with a Coneat Index of 120 to 140, good location, average extension of about 700 hectares and good infrastructure); this is how its price has developed over the last few years:
All the positive conditions which have enabled the financial growth of this establishment to grow financially will remain as such; hence a price of no less than U$ 5 500 (American dollars) per hectare is expected to be reached by the end of the year 2008.
