- The forestry sector employs 16.500 direct workers in Uruguay
- The forestall industry represents 1.3% of Uruguay’s global GDP
- Wood companies had great participation in the direct foreign investment in the country
- Exports in the sector have had an excellent dynamism these last years. In 2013, the forestry sector’s exports represented 10% of the total exports in the country
The wood production in Uruguay benefits from excellent weather and soil conditions, apart from opportunities to add value in the industrial phase. In Uruguay XXI report (link a pdf en inglés) you can find in depth information on the sector, which is getting more and more relevance in the Uruguayan economy.
Forestry sector importance in Uruguay
In Uruguay there are 1850 companies in the forestry sector, which employ in total 16.500 workers, without counting the indirect employments (transport, logistics, and others). More than 90% of this companies are small and micro enterprises with less than 20 employees.
The sector is composed of three phases: the primary phase is the agrarian one, and involves the production of plants in plant nurseries and the harvest. The secondary phase is the industrial one, the transformation of the wood and its commercializing. It has even gained importance, regarding this phase, the generation of electricity using forestry products (for example, biomass). Some companies of the sector count with plants for the generation of electricity with biomass.
Activities such as logistics, transport and other required professional services are also part of this sector. In Uruguay it’s very common for all the phases to be integrated in the companies. Some of the big exporters even provide themselves with raw material.
The primary phase has shown a sustained growth of 4.8% per year average between 2004 and 2013. That is, approximately 0.5% of the global GDP of the Uruguayan economy. The industrial phase has also shown a growing path, especially after the launch of UPM plant. Then, the production of wood and products derived from it evolved from representing 1.3% of the global GDP to represent 3% in the last years. When the company Montes del Plata is working, the sector will represent the 4.5% of the global GDP.
The direct foreign investment in Uruguay has tripled in the last 6 years. In fact, Uruguay is the second country receiving foreign investment of the whole South America. In 2013, this investment reached USD 2796 million (its historic maximum), 5% of GDP. The companies which extract wood had an important part in the Direct Foreign Investment. (USD 700 million between 2005 and 2008). Some of the foreign companies that have installed themselves in Uruguay are: UPM from Finland, one of the greatest cellulose productors in the world, which counts with a subsidiary, “Forestal Oriental”, that has been operating in Uruguay for more than 20 years. Weyerhaeuser products, one of the biggest forestry companies of the world, and Montes del Plata, cellulose producer launched in Uruguay in 2009.
The forestry sector’s exports have had an excellent dynamism these last years, partly thanks to the installment of UPM plant. In 2013, the exports of the whole sector reached USD 1000 millions, which represented the 10% of the exported total in Uruguay (6% was covered only with cellulose export). The main destinations of the products in 2013 were China (43%) and The Netherlands (33%). Regarding the wood exportation, this year it reached values 2.5 higher than the last 10 years. This is due to the chips, sawn timber and wooden tables’ sale. Paper and cardboard sale are also reaching high levels if seen from a historic perspective.
For 2014, it is foreseen an important growth of the cellulose exportation volumes. This is due, in part, to the fact that the last months of 2013 the government authorized the expansion of the authorized production amounts for UPM’s plant, which supposes a rise of 100,000 tons in 2014. Plus, in june of the current year Montes del Plata’s new plant started working, which will produce 1.3 million tons of cellulose per year. On the other hand, the launching of a third cellulose plant in the country has been announced for 2016 approximately.
Why investing in Uruguay?
Between 2004 and 2013, Uruguay grew an average of 5.7% per year. It was one of the countrie with more growth of the whole region. Moreover, in the country there is a favorable business atmosphere, a stable juridical phrame, social stability and stimulation for the investors.
Uruguay is located in the same latitude than the main forestry enterprises of the southern hemisphere: Australia, New Zealand, South Africa, Chile and Argentina. The climate conditions and the soil assure good competitiveness at an international level.
In 2013 the forestry sector exports represented 10% of the total exports for the country. Once Montes del Plata is operating with full potential, the sector’s exportations will be 14% of the total (and 4.5% of the GDP). Uruguay is advancing in the development of the wooden constructions. There are important foreign forestry companies that have installed themselves in Uruguay to work.
Visit the current offer of fields with forestal aptitude and actually forested ones in Caldeyro Victorica. Do not hesitate to ask any questions. We are professionals in Real Estate. We will counsel you on which is the best business option for you.
If you want to read the complete report by Uruguay XXI, see the document here.