COUNTRY PROFILE Official Name: República Oriental del Uruguay

Total Area: 176,215 km2

Political Division: 19 Provinces

National Capital: Montevideo

Location: South America bordering Argentina & Brazil

Government: Democratic Republic with Presidential system

Legal System: written laws based on Constitution

Currency: Uruguayan Peso (21 U.Pesos for U$S 1)

Official Language: Spanish

Business Languages: Spanish, English, Portuguese

Races: White 88% (European ascendants); Black 8% (Afroamericans); Natives 4% (from Charrua ascendants)

Religions: No official religion (Catholics 56%, non religious 38 %, Protestants 2 %, Jews 2%)

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SOCIAL INDICATORS Population: 3,4M (2011)

Annual Demographic Growth Rate: 0,4% (2011)

Density (pop/km2): 18,8

Life Expectancy at Birth: 76,4 years (2011)

Infant Mortality Rate: 7,7/1000

Literacy Rate: 98%

Incidence of Indigence: 0,5 (2011)

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SOCIAL INDICATORS Total Homes with pipe water: 96.1%

Total Homes with electric power: 98.5%

Fixed teledensity (fixed lines per 100 inhabitants, 2011): 28.6

Mobile teledensity (mobile services every 100 inhabitants, 2011): 136.3

PC penetration in homes: 69% (2010)

Internet Users (per 100 inhabitants, 2010): 58

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CLIMATE Temperate & pleasant through the year with no regional variations

Average Rainfall: 1000-1400mm (no rainy season)

Average Temperatures: Spring 17°C; Summer 25°C; Autumn 18°C, Winter 12°C

Winds: most frequent NE 15km/h & Cool SW

Relative Moisture: average 70-75%

Sun hours annual: 2400-2600

Snowstorms & Hurricanes unknown

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TOPOGRAPHY Transition from Pampas plains and hilly uplands of Brazil

Mostly gently rolling plains (fertile)

Low hills SE & NE (h. point 512m)

Fertile coastland lowlands

Earthquakes unknown

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HYDROGRAPHY & WATER RESOURCES Water-rich land

Prominent bodies of water mark S, W & E limits

Numerous lakes & lagoons

Three systems of rivers draining (Uruguay, De la Plata & Atlantic Ocean)

4 significant aquifers (part of the Guaraní aquifer 45000km2 only in Uruguay)

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MACROECONOMIC INDICATORS (2011) Natural Resources: fertile arable land, minor minerals, hydro-power

(75% of the country´s requirements) & fisheries (no oil or natural gas reserves so far)

GDP: U$S 46710 M

GDP per capita: U$S 13861

Annual GDP Growth Rate: 5.7%

Annual Inflation Rate: 8.6%

Unemployment Rate: 6%

Exports (U$S Millions) goods & services: 12746

Imports (U$S Millions) goods & services: 12379

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Trade Surplus/Deficit (U$S Millions): 367

Gross National Debt (as a % of GDP): 55.6%

Foreign Direct Investment (U$S Millions): 2191

Sustained Economic Growth: 9 years growing at 5.3% average

Estimated Growth for 2012: 4%

GDP per capita tripled in last 7 years

Foreign Direct Investment tripled in last 6 years (4.7% of GDP)

Uruguay one of the major recipients for foreign investment in SA

MACROECONOMIC INDICATORS (2011)

EXTERNAL SECTOR Dinamic & growing external sector

Diversified products, services & markets

Uruguay exports to over 160 different destinations

Main Export Goods: meat, soybeans, cereals, dairy products, skins & leather, wood & articles, wool

Main Services Exported: tourism, transportation, corporate, information technology, financial

Main Partners: Brazil, USA, Argentina, Mexico, Germany, China, Spain

Main Import Goods: Machinery & mechanical appliances, fuel, oil, vehicles, electrical machinery & equipment, plastics, fertilizers

Main Partners: Brazil, Argentina, USA, China, Russia, Germany

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LOGISTICS, INFRASTRUCTURE & COMMUNICATIONS Privileged strategic location by the Rio de la Plata where the Parana & Uruguay river empty into the Atlantic Ocean

Ideal location & infrastructure to stock and distribute goods to the richest region in South America

New modern airport, only deep harbours in SA that operate under Free Port regime

Montevideo port is a regional hub for the Southern Cone and has world class facilities

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LOGISTICS, INFRASTRUCTURE & COMMUNICATIONS Uruguay´s road network is the densest in SA

Uruguay ranks 2nd in SA in roads´quality (Global Competitiveness Report 2012, World Economic Forum)

Uruguay is the most advanced country in Latin America according to the Index of Development of Information and Communication Technologies (ICT, 2011)

Highest mobile phone teledensity in Latin America

Highest rate of Internet users in Latin America

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INSTITUTIONS: STABILITY & SAFETY High reputation for stable and comprehensive legal framework

Respect for Property Rights & Contracts

Highly stable and solid institutional framework

Legislative and Executive powers operate properly

Judicial institutions operate independently

Top rankings in political & economic stability

Top rankings in transparency and lack of corruption

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BUSINESS FRIENDLYINVESTMENT ENCOURAGING POLICIES

Equal conditions for domestic and foreign investors

No restrictions when transferring capital into, or out of the country (dividends repatriation); no limitations to ownership by foreign buyers

Free Exchange rate market (no government intervention on price regulations); Investments can be done in any currency

Banking & taxing secrecy protected by law

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BUSINESS FRIENDLYINVESTMENT ENCOURAGING POLICIES

Solid finance market strong presence of international banking controlled by the Central Bank of Uruguay

Investment Promotion regime established by National Law N° 16906

National Law Nº16906: domestic & foreign investment is declared of national interest

National Law Nº16906: significant tax benefits as the exoneration of Income Tax for maximum amounts and timeframes depending on the kind of project

Uruguay recovers Investment Grade (Standard & Poor´s – April 2012; Moody´s – July 2012)

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URUGUAY: INTERNATIONAL RANKINGS 1st in Latin America in Political Stability (2010), World Bank´s Worldwide Governance Indicators

1st in Latin America in Democracy Index (2011), The Economist Intelligence Unit

1st in Latin America in Public trust of politicians (2012), World Economic Forum

1st in Latin America in Global Peace Index (2012), Institute for Economics & Peace

1st in Latin America in the Legatum Prosperity Index (2011)

2nd in Latin America in Judicial Independence (2012), World Economic Forum

2nd in Latin America in Corruption Perception (2011), Transparency International

Uruguay has the lowest incidence of crime and violence in business in SA (2012), World Economic Forum

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PRIMARY PRODUCTION Climate, topography, non degraded fertile soils, water abundance

Ideal conditions for efficient / intensive grazing & cropping systems

USE OF SOILS

Total Productive Area: 17M ha.

Grazing: 15,300,000ha.

Cropping: 1,200,000ha.

Forestry: 750,000ha.

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TYPE OF FARMLANDS IN URUGUAY AGRICULTURE (cropping: Soya/Maize/Wheat/Barley/Rice, etc)

GRAZING (Beef, Sheep, Dairy Systems)

FORESTRY (Eucaliptus, Pine trees, etc)

HORTICULTURE, VINEYARDS & OLIVES

LAND FOR REAL ESTATE DEVELOPMENT (coastal, lifestyle, recreation & tourism)

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SOME INDICATORS (2011) Nº OF BEEF CATTLE HEADS: 11M

Nº OF SHEEP CATTLE HEADS: 7.4M

Nº OF DAIRY CATTLE HEADS: 700,000

STAR SUMMER CROP: SOYBEANS (869,000HAS PLANTED)

STAR WINTER CROP: WHEAT (593,400HAS PLANTED)

FORESTRY: 650,000HAS OF EUCALIPTUS

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MAIN AGRIBUSINESS CHAINS: MEAT INDUSTRY GROWING VERTICAL INTEGRATION (big players own land, breeding/finishing systems & freezing works)

OVER 40 OPERATORS EXPORTING, TOP 10 ACCOUNTABLE FOR OVER 70% OF TOTAL EXPORTS

OVER 50% OF TOTAL PRODUCTION IS EXPORTED

HIGH QUALITY STANDARDS (high end markets USA, Canada, EU)

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MAIN AGRIBUSINESS CHAINS: DAIRY INDUSTRY CONAPROLE (COOPERATIVE) ACCOUNTABLE FOR 60% OF PRODUCTION

SEVERAL NEW PLAYERS ENTERING THE MARKET

OVER 60% OF TOTAL PRODUCTION IS EXPORTED (BEING POWDER MILK & CHEESE ACCOUNTABLE FOR 70% OF TOTAL)

HIGH QUALITY STANDARDS

MAIN MARKETS: MEXICO, VENEZUELA, BRAZIL, CHILE, ARGENTINA, RUSSIA

MAIN AGRIBUSINESS CHAINS: CROPPING INDUSTRY HIGHEST GROWING RATES IN LAST YEARS

DRIVEN BY INCREASING GLOBAL DEMAND & HIGH PRICES INTERNATIONL CROPPING POOLS OPERATING IN URUGUAY

SOYBEANS & WHEAT ARE THE STAR CROPS

OVER 60% FOR EXPORT MARKETS (CHINA, ARGENTINA, BRAZIL)

MOSTLY AS CRUDE GRAIN (LITTLE ADDED VALUE) WITH SOME EXCEPTIONS (MALTING BARLEY & RICE CHAINS)

MAIN AGRIBUSINESS CHAINS: FORESTRY INDUSTRY HIGHLY INTEGRATED

MULTINATIONAL CORPORATIONS OWN LAND, PLANTATIONS & NEW HIGH TECHNOLOGY PULP MILLS

OVER 70% OF PRODUCTION FOR EXPORT (MAINLY AS WOOD ROLLS FOR PULP INDUSTRY)

MARKETS: NORWAY, FINLAND, PORTUGAL, SPAIN, JAPAN, USA, SWEDEN

MOST OF THE EXPORTS USED TO BE AS NON TREATED WOOD

NEW MILLS STARTING TO ADD SIGNIFICANT VALUE TO THE CHAIN (FIRST PULP EXPORTS DONE IN 2008)

AGRIBUSINESS IMPACT ON ECONOMY

GDP AGRICULTURE PER SUB-SECTOR:

ANIMAL PRODUCTION 54%CROPPING 38%FORESTRY 8%

LAND BASED INDUSTRIES EXPORTS (as a % of total): 67.3%

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Transparent land market

The whole country is mapped with soil types according to productivity

Each soil type has an associated productivity index (Coneat Index System)

Information is public and available on line (verifiable)

Inserting land property number(s) Coneat Data Base shows online:

Location Water resourcesDetailed map with soil types and their productivity indexDescription of each soil typeThe average Coneat productivity index for the property

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LAND MARKET

ADVANTAGES OF THE CONEAT SYSTEM

Transparent land market allows to verify information for every piece of land in Uruguay

A very handy and useful tool to assess potential land use for any given property

The Coneat Index correlates with the price of land

Thus easy to compare properties and assess fair market value

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THE COST OF LAND

(1HA = 2.47 ACRES)

Map Regions created by Terramar Christies to facilitate the analysis

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EXPECTED PROFITABILITY ACCORDING TO LAND USE

QUOTED VALUES DO NOT INCLUDE LAND APPRECIATION

Source: CREA Groups 2012; Terramar Christies market average information last 5 years

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FARMLANDS MANAGEMENT

FARMING COMPANIES IN URUGUAY ARE EASY TO SET UP & OPERATE

1. THE BUYER/INVESTOR MAY FARM LAND DIRECTLY

2. THE INVESTOR MAY HIRE A SPECIALIST FARM MANAGEMENT COMPANY TO DO THE JOB

3. INVESTOR MAY LEASE THE PROPERTY TO A THIRD PARTY

THERE IS A HIGHLY LIQUID MARKET FOR FARM LEASING THIS MARKET IS VALID FOR ALL LAND USES NEVERTHELESS DEMAND FOR CROPPING LAND IS HIGHEST

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TAXES IN FARMINGFARMING SECTOR HAS FAVORABLE TAX TREATMENT INCOME TAX:

Flat 25% rate (may be 10-20% with deductions) Small farms (below U$S 238,000/year) rate is lower

ASSET TAX: exonerated by law

PROPERTY TAX: low (0,2% average)

ADDED VALUE TAX (VAT): exonerated for most of the main productive inputs and active assets related to farming

CAPITAL GAINS TAX: 12.5% for corporate vehicles (lower for individuals)

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WHY FARMLANDS IN URUGUAY

FINAL COMMENTS

Strategic location

Competitive logistics, infrastructure & communications

Highest life quality standards in SA

Human Resources: availability of educated & trained people

Sound Business Environment:

Stable & Safe countryExpanding economySolid legal systemInvestor friendly

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WHY FARMLANDS IN URUGUAY

FINAL COMMENTS

Ideal conditions for efficient farming systems (climate, soils, water, etc)

Diversity of farm types and farming systems

Solid and integrated agribusiness chains

Transparent & liquid land market

Easy to purchase and develop farming companies

Competitive land prices & consistent annual returns

Favorable tax treatment

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WHY FARMLANDS IN URUGUAY

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RURAL PROPERTIES & AGRICULTURAL BUSINESS CONSULTANCY

Farmland Sourcing

Land Valuation

New Farming Venture Assessment

Integral Agricultural Advice

Integral Farm-related Legal & Taxing Advice

Structuring Land Purchase & Land Based Companies

SERVICES

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THANK YOU

MAIN OFFICES

Gorlero esq. Calle 17PUNTA DEL ESTE – URUGUAY+598 4244 2222campos@terramar.com.uy

RURAL PROPERTIES & AGRICULTURAL BUSINESS DIVISION

Ignacio GonzálezAgricultural Business Consultant (MSc)Director+598 95630806ignacio@terramar.com.uy