After strong growth in the first decade of the 2000s, the agricultural sector lost dynamism after the drop in commodity prices in 2014. However, and again due to very favorable prices, “the sector resumed a path of firm expansion recently, with average annual growth that would exceed 5% in 2021-2022,” said the economist and partner of Exante, Florencia Carriquiry, during the Impact of Agribusiness on the Uruguayan Economy conference on Monday at Expo Prado.
The sector is the largest multiplier in the Uruguayan economy (3.1), generates some 270,000 jobs (17% of the total) and in the interior of the country it is responsible for almost 40% of economic activity.
Agricultural and agro-industrial exports exceeded US$ 8,000 million in 2021, reaching a historical record. Around 70% of the country’s total exports of goods are agricultural based.
Ex ante
The strong growth of agribusiness in recent decades has occurred in the midst of important transformations within the agricultural sector, which promoted a substantial increase in productivity levels in the use of land and a strong growth in production in all the main items, according to Exante.
Ex ante
Between 1991 and 2021, soybean production multiplied by 131; wood extraction by 5.8; that of wheat by 5.2; milk for 2.9 and meat 1.9. Dairy farming was the item that increased its productivity per hectare the most in the last 30 years.
Impact on the Uruguayan economy
The Production Value of agribusiness amounted to about US$ 11,000 million in 2021of which US$ 6,600 million are direct added value (in agriculture or agribusiness).
Considering direct, indirect and induced impacts, agriculture contributes US$ 12.4 billion of added value to the Uruguayan economy, which is equivalent to more than 20% of the country’s total GDP. In other words, for each unit of value added in the countryside, another two are generated in the rest of the economy (which implies that agriculture has a multiplier equal to three).
Ex ante
The impact of the sector is particularly important for the economy of the interior of the country, where it is the base of almost 40% of the total GDP..
Additionally, the agribusiness directly, indirectly and induced support some 270 thousand jobs (17% of total jobs in the economy), contribute about US$ 3,500 million to the total wage bill (gross) of the economy and with some US$ 1,900 million to tax collection (including taxes, fees and social security contributions).
Ex ante
Ultimately, the The impact of agribusiness on the Uruguayan economy is far greater than the figures for its direct contribution, due to the fundamental linkages that it presents with other economic activities, specifies Exante. In fact, agriculture presents a value-added multiplier higher than that of various sectors of activity, which implies high impacts spilling out of the sector.
Ex ante
