Hay Market Research: Uruguay

Part
01
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Part
01

Hay Market Research: Uruguay, Part 1

The research focuses on the hay market in Uruguay. There are limited statistics on hay farming and export, as clarified in the research strategy and helpful findings underneath. For more details, please refer to the following findings and the attached spreadsheet, row 18, columns C-I.

Helpful Findings

  • Uruguay is a small market for growing hay, such as alfalfa. In 2018, there were approximately 172,974 acres (70,000 hectares) of land dedicated to planting alfalfa, which only represented 1.75% of the 4 million hectares in the Latin American region.
  • In terms of export, the United Nations' Comtrade Database has the record for hay and similar forage products (HS1214) exported from Uruguay. In 2018, 1,324 metric tons (1,324,954 kilograms) of the HS1214 products worth $376,410 were exported from Uruguay. However, it is not clear about the exact amount and value of hay within this commodity group.
  • The major export destinations of the HS1214 commodities were Turkey, China and Iraq, which represented 92.5% of the export value in 2018.
  • In 2018, the number of live dairy cows, beef cows, horses, sheep and goats in Uruguay was 330,000, 4,050,000, 408,881, 6,399,000 and 17,936 heads, respectively.

Research Strategy

The research reviewed a series of research and conference papers as well as databases. There are limited statistics on the planting and trade of hay in Uruguay. In the process, the research team identified some related findings, which are expected to help estimate requested data, such as hay export quantity, hay produced and associated market value.

Part
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Part
02

Hay Market Research: Uruguay, Part 2

Alfalfa, fescue grass, and common lotus farms, and artificial grasslands comprising a combination of "species such as white clover, red clover, fescue, ryegrass, and lotus," can be found in Uruguay. The available data on the production quantities of different hay types can be found in columns J-W of row 19 the attached spreadsheet.

Select Findings

  • Permanent artificial grasslands, those lasting over two years, comprised of "species such as white clover, red clover, fescue, ryegrass, and lotus."
  • White clovers are widely used in intensive livestock and dairy systems, where they are mixed with grasses and used.

Research Strategy

We searched the Agricultural Census of Uruguay, Instituto Nacional de Investigación Agropecuaria (INIA, Uruguay), industry portals, and research reports for hay production data in Uruguay. However, as the Agricultural census had only published the harvested area for a few hay crops, we provided qualitative information indicating the use of different hay types. The calculation for production quantity of alfalfa using yield/ ha is below:

The average yield per hectare of alfalfa hay = 18.3 tons/ ha
Therefore, the alfalfa produced = 70,000 ha *18.3 tons/ ha = 1,281,000 tons


Part
03
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Part
03

Hay Market Research: Uruguay, Part 3

Introduction

There were limited figures regarding how much of the hay produced in Uruguay becomes large bales, small bales, round bales, pellets, or other type. For more details, please refer to the following findings and the attached spreadsheet, row 18, columns Y-AE.

Overview

Research Strategy

This research sourced industry reports, government sources and relevant databases finding there were limited statistics and figures on the hay industry in Uruguay. In an attempt to triangulate the type of hay bale or pellet produced, we also did a deep dive into market research and agricultural databases, again finding very limited data.


Part
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Part
04

Hay Market Research: Uruguay, Part 4

Uruguay's hay market production is completely dominated by large cooperatives. Roughly 95.4% of the cultivated land in Uruguay is owned by farms with over 50 hectares of land. According to the Uruguay's Ministry of Agriculture, the majority of the agricultural production is used by their local dairy sector, with over 83% of farms owning cattle or other animals. All the information has been included in row 18 of the attached spreadsheet.
Part
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Part
05

Hay Market Research: Uruguay, Part 5

After an exhaustive search through government databases, reports, and credible research reports, we could not determine the required animal species' hay consumption. However, we could triangulate the hay consumption for dairy cows, beef cattle, and sheep. This information has been entered into the attached spreadsheet.

Key Findings

  • There are about 4,050,000 beef cattle in Uruguay (2019).
  • Hay consumption by beef cattle is estimated to be between 20,115,894 and 26,821,192 metric tonnes annually.
  • The sheep stock in Uruguay for 2015 is estimated to be 6,670,000.

Research Strategy

To determine the hay consumption by animal species in Uruguay, we scoured through government articles/reports and publications, market research data, and research reports from credible organizations. We were hoping to find the hay consumption for dairy cows, beef, equine, sheep, goats, and pets. This search method yielded no results. During our search, we discovered that very little information addressed the hay consumption for the animal species required.
Secondly, we searched through international databases such as the Food and Agricultural Organizations (FAO) and other credible government organizations. This search method provided no results as well. We discovered useful data points that would allow us to triangulate this information.
Finally, the research team thought to triangulate this data. We leveraged information for the standard consumption level per animal weight, the standard consumption level of hay per species, and the total number of the required animal species in Uruguay. This search method provided the required information to triangulate the hay consumption for dairy cows, sheep, and beef cattle. However, limited information restricted the triangulation for equine, goats, and pets. We discovered that Uruguay's pet food industry (dogs and cats) consumes about 120,000 tons of pet food yearly.

Calculations

Dairy Cows

  • Research suggests that the typical diet for a dairy cow includes 30 to 35 pounds of baled hay per day. Other surveys indicate that a cow would eat 30 to 40lbs bale of hay per day.
  • The annual consumption of hay per dairy cow is estimated at approximately (30 pounds x 365 days, 35 pounds x 365 days) = 10,950 to 12,775 pounds.
  • Dairy cows in Uruguay would consume 3,613,500,000 pounds (10,950pounds x 330,000dairy cows) to 4,215,750,000 pounds (12,775pounds x 330,000dairy cows) of hay yearly.
  • The conversion of pounds to metric tonnes = lb/2204.6.
  • This is equivalent to 1,639,072 metric tonnes (3,613,500,000/2204.6) to 1,912,251 metric tonnes (4,215,750,000/2204.6) per year.

Beef Cattle

  • Surveys indicate that a cow would eat a bale of 30 to 40lbs of hay per day.
  • The annual consumption of hay for a dairy cow is estimated at approximately (30 pounds x 365 days, 40 pounds x 365 days) = 10,950 to 14,600 pounds yearly.
  • Beef cattle in Uruguay would consume 44,347,500,000 pounds (10,950 pounds x 4,050,000 beef cattle) to 59,130,000,000 pounds (14,600 pounds x 4,050,000 beef cattle) yearly.
  • The conversion pounds to metric tonnes = lb/2204.6.
  • This is equivalent to 20,115,894 metric tonnes (44,347,500,000/2204.6) to 26,821,192 metric tonnes (59,130,000,000/2204.6) per year.

Sheep

  • On average, each sheep should eat about 1.5 to 5 pounds of quality hay per day.
  • The annual consumption of hay for sheep is estimated at approximately (1.5 pounds x 365 days, 5 pounds x 365 days) = 547.5 to 1,825 pounds yearly.
  • Sheep in Uruguay would consume 3,651,825,000 pounds (547.5 pounds x 6,670,000 sheep) to 12,172,750,000 pounds (1,825pounds x 6,670,000sheep) yearly.
  • The conversion of pounds to metric tonnes = lb/2204.6.
  • This is equivalent to 1,656,456 metric tonnes (3,651,825,000/2204.6) to 5,521,523 metric tonnes (12,172,750,000/2204.6) annually.
Part
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Part
06

Hay Market Research: Uruguay, Part 6

Hay bales that retain their components' green color are considered a quality product in Uruguay. Products that meet the quality expectations generally drive up their values at the point of sale. Hay producers and livestock farmers are typically involved in the sale. In Uruguay, it is typical to undertake certain practices such as haymaking and silage to ensure an adequate supply of quality hay products amidst the seasonal harvest yield changes. The rest of the requested details on the hay selling process in Uruguay were presented below and inputted in the shared spreadsheet within row 18, and under columns AS to AU.

Valuing the Hay Before the Sale

  • When planning to buy forage products, it is best to evaluate its quality prior to storage.
  • To also ensure that the quality of the forage is suitable for the intended use during purchase, the following have to be considered as well: the destination of the product, the type of supplements used, and the classification of the animals that will consume the feed.
  • Preparing forage for its intended use requires adapting to the various moisture levels and harvest efficiency.
  • When harvesting hay, the material should have over 40% of dry components to ensure that the reduced moisture can slow down the degradation phase.
  • To ensure that the bale is of good quality, it has to be dried enough within the shortest possible time. This can help prevent the loss of dry matter, preserve its nutrients, and stop fungal growth issues.
  • The following are some of the characteristics of good quality bales that can impact their selling price:
  • A hay bale's quality can also be determined through its color. The bale should maintain the green hue of the original components. The bale can look quite opaque due to the drying process but the color should still be there.

Who is Involved in the Sale

Common Practices Before and After Selling the Hay

  • Pasture production is a seasonal occurrence in pastoral economies such as Uruguay.
  • Hay is the main reserve that is manufactured by producers in the country to cope with the seasonal availability of forage.
  • In terms of seasonality, "50% of the grass is produced in spring, 25% in the fall, 15% in summer, and 10% in winter."
  • Given this, producers have to manage the availability of forage throughout the year as they take into account periods of surplus and scarcity.
  • One of the practices employed before a sale is to close a pasture during fall to let the forage flourish during this season. The grass can then be reserved for winter consumption when the growth condition is not optimal.
  • With regard to forage preservation before the sale, there is still no storage approach found that can make the quality of the forage better. The best strategy then is to reduce the losses that will naturally happen.
  • Haymaking or slipacking is one of the methods used to preserve forage.
  • The method is used to address the challenge of obtaining good quality hay.
  • Excessive precipitation and the challenge in undertaking the right drying process gave birth to the development of an intermediate process after silage and before the haymaking step.
  • Haymaking is a preservation process that involves harvesting the forage, pre-weeding it for some time to reach a moisture content ranging from 40% to 60%, and enclosing it in a certain type of polyethylene film.
  • During the haymaking process, the harvesters also aim to achieve the right time to cut to ensure that the forage will be dry enough without too much loss of nutrients.
  • This technique attempts to integrate the principles of proper haymaking through partial desiccation and ensilage preservation through anaerobic fermentation.
  • Another process being employed to preserve the forage prior to sale is the silage method.
  • The process involves "spontaneous lactic fermentation under anaerobic conditions."
  • During the fermentation process, the product acidifies. This translates to a drop in the pH value to 4.2.
  • Under these conditions, bacterial growth and fungal infestations are minimized. This can then preserve the quality of the forage.
  • The main silages that are employed in Uruguay include "a) pasture silage (with or without pre-weeding), b) silage of whole plant crops (corn and sorghum), and c) wet grain silage (corn and sorghum).
  • Climate is also an important consideration when preparing the hay for sale.
  • Given Uruguay's climate, haymaking is best done in November and December, the late spring period.
  • Producers need to ensure that the forage harvest and preparation are all done within the quickest possible time to preserve the quality of the product.
Part
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Part
07

Hay Market Research: Uruguay, Part 7

Uruguay farms around 70,000 hectares of alfalfa hay. The alfalfa cubes market in Latin America is expected to grow at a CAGR of 7.3% between 2020 to 2027. A full overview of the hay market in Uruguay can be found in row 18 of the attached spreadsheet.

Selected Findings

  • The biggest alfalfa-producing country in Latin America is Argentina, with around 4 million hectares farmed. In comparison, Uruguay farms only 70,000 hectares of alfalfa.
  • The number of hectares of alfalfa farmed in Latin America is as follows: 4 million hectares in Argentina, 170,000 hectares in Chile, 120,000 hectares in Peru, 70,000 hectares in Uruguay, and 40,000 hectares in Brazil.
  • The alfalfa cubes market in Latin America, which Uruguay is part of, is expected to grow at 7.3% CAGR between 2020 to 2027.
  • According to UN Comtrade, an international trade statistics database, the value of exports of commodities from Uruguay which includes hay, alfalfa, forage, fodder roots, and similar forage totaled $376,000 in 2018; it has decreased by $42,000 from the previous year when the aforementioned commodities amounted to a total of $418,000 (2017).
  • The top destinations of forage products from Uruguay which includes hay, alfalfa, fodder roots, and forage goes to Turkey with a share of 70% and China with a share of 16.4%.
  • Uruguay imports the aforementioned forage products mainly from Argentina, with a share of 92%, and Brazil, with a share of 7.83%.
  • Loughman Trade Corp and Blaiter Sa are two major players in the Uruguayan alfalfa hay market; these two companies were founded in 1985 and 1989 respectively.


Part
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Part
08

Hay Market Research: Uruguay, Part 8

The hay market's SWOT analysis in Uruguay was conducted and the attached spreadsheet populated with the findings. Additionally, a summary of the findings has been provided below.

Strengths

  • Uruguay boasts the record of having the most suitable agricultural land per capita in the world.
  • Climate and geographical hazards in Uruguay are minimal.
  • Approved additional financing by the World Bank to facilitate the implementation of the Project for the Sustainable Management of Natural Resources and Adaption to Climate Change (DACC). Additional financing of $42 million has been provided to help another 3,900 Uruguayan farmers better prepare for adverse climatic change through the project. The project will benefit hay farmers and ensure continued production in case of adverse climatic change.

Weaknesses

  • In the past decade, the amount of hay exported by Uruguay has been gradually decreasing. In 2010, the country exported 7.81 million kg of hay, 2014 it exported 2.16 million kg, while in 2018, it exported 1.32 million kg. The trend indicates that the country's international presence as an exporter of hay is deteriorating. If the trend continues, the revenues generated from exporting hay will continue to decline.
  • Uruguay only cultivates 70,000 hectares of alfalfa hay and therefore faces stiff competition from its neighbor Argentina which cultivates 4 million hectares.

Opportunities

  • Growing worldwide demand for alfalfa hay provides Uruguay with opportunities to increase its export quantity.
  • An opportunity lies in training women in agricultural production. Unlike many countries, women in Uruguay have high educational attainment giving them an advantage in attaining technical know-how and emerging agricultural practices that will increase farm production including hay.
  • 70% of hay produced in Uruguay is exported to Turkey. Therefore, Uruguay can expand its international presence by targeting major hay importers like China, UAE, and Saudi Arabia.

Threats

  • The Hay market largely depends on the livestock market. In 2018, livestock production in Uruguay decreased by 4% when compared to the previous year. A 4.2% reduction in livestock stock is among the factors that caused a decrease in livestock production.
  • Furthermore, the USDA forecasts that beef production in Uruguay will decrease by 3% in 2020. If a reduction of the stock of livestock continues, then the hay market will be negatively affected.




Sources
Sources