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Uruguay Livestock Ranching
Uruguay's livestock herds did not expand appreciably
after
1930. In 1908 there were 8 million cattle and 26 million
sheep in
the country. In 1981 the number of cattle peaked at 11
million,
while the number of sheep had declined to 20 million.
Because the
land area dedicated to livestock raising has not changed
significantly, these figures illustrated the lack of
progress in
the sector. The single largest investment in cattle herds
was
complete by 1930, when Herefords were substituted for the
original mixed breeds. Extensive ranching methods
facilitated
livestock raising because little investment was required.
But
these methods also limited the carrying capacity of the
land and
the size of the stock. By the 1970s, it took twenty-six
Uruguayan
cattle to yield one ton of beef, compared with about
eighteen in
Argentina and about thirteen in the United States or
Western
Europe. The production of wool and mutton per head of
sheep was
also low: 3.5 kilograms of wool per head, compared with
over 5
kilograms per head in Australia or Argentina. In addition,
both
cattle and sheep herds were subject to losses because of
limited
efforts to prevent disease.
The vulnerability of the range-fed livestock herds was
further demonstrated in the late 1980s when Uruguay
experienced a
severe drought. Millions of animals died or had to be
slaughtered
prematurely. The drought lasted longest in the center of
the
country, where most of the largest cattle ranches were
located
(the departments of Cerro Largo, Durazno, and Tacuarembó).
The
leading sheep-ranching departments in the northwest
(Artigas and
Salto) were not as severely affected.
Raising sheep for wool in Uruguay became less
profitable
during the 1960s. There was increasing worldwide
competition from
petroleum-based synthetic fibers. After the oil price
increase in
1973, however, wool was once again in favor. Production
surged
from about 61,000 tons per year in the mid-1970s to 87,000
tons
in 1986. Wool surpassed beef as Uruguay's most valuable
export in
the early 1980s. It also supplied the growing woolen
textile and
apparel industry, which earned additional foreign
exchange.
Sheep, whose stock increased to almost 26 million by
1989,
were also raised for lamb and mutton. The potential for
Uruguay's
export of sheep meat in 1989 was about 3 million head, as
compared with annual exports of about 2 million head in
the early
1980s. However, a severe drought in the first half of 1989
reduced the performance of this subsector by about 10
percent
during that period.
Rising world beef prices stimulated the Uruguayan
cattle
industry in the late 1970s. At first, rising prices
increased the
profitability of cattle ranching but ultimately led to
considerable instability in the sector. When many ranchers
expanded their herds after the 1978-79 beef price
increases, the
price of pastureland grew almost tenfold. Because real
interest
rates were low or negative, ranchers were willing to
borrow
heavily to increase their landholdings. But beef prices
soon
leveled off, and many ranchers were left with large,
unpayable
debts. Land prices fell sharply; banks could not cover
their
loans even by foreclosing. As the bank crisis mounted, the
Central Bank stepped in to provide refinancing in United
States
dollar-denominated loans. Most ranchers avoided bankruptcy
but
had to slaughter record numbers of cattle to service their
debts.
Many ranchers took the opportunity to switch to sheep
ranching
because wool appeared to face more stable world demand.
Thus,
Uruguay's cattle herds declined by 20 percent from 1981 to
1984.
Cattle ranchers rebuilt their herds during the latter
half of
the 1980s but were hindered by limited credit and severe
drought.
Damage from the prolonged drought had reached alarming
proportions by the end of 1989, when the cattle stock was
down to
9.4 million head. The number of cattle fell by 738,000
head
between June 1988 and June 1989, the largest annual drop
in
fifteen years. About 2 percent of the total had died, and
the
rest had been killed and sold (50 percent more than
usual). In
the July-November 1989 period, the beef cattle herd was
depleted
by an additional 622,000 head. The increased slaughter
rates
allowed meat-packing plants to pay less for beef,
decreasing
ranchers' profits.
The continuing difficulty in the sector prompted the
government to launch Operation Manufacture in March 1989.
The
program eased the ranchers' financial burden by extending
them a
special line of credit, lowering their tax rate by 20
percent,
and providing for case-by-case assistance. The government
also
announced the opening of a line of credit with terms of up
to
eight years for herd replacement. Sheep ranchers, who
suffered
fewer losses from the drought, were not eligible for these
government programs.
The dairy industry, based in the departments near
Montevideo,
expanded considerably in the 1980s. Milk production
increased
from 400,000 tons in 1979 to 635,000 tons in 1987. Even
though
many dairy farmers still relied on natural pastures,
limiting the
milk output per cow, Uruguay was more than self-sufficient
in
dairy products and exported to other Latin American
countries.
Most domestic milk processing and marketing was controlled
by the
National Dairy Products Cooperative, which distributed
dairy
products throughout the country.
Data as of December 1990
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