Extensive research by the team of the original shareholders settled on San Pedro as the prime area for their dairy farming venture which has become one of the largest milk-producing farms in Uruguay.
With 400ha irrigated by pivots, the farm has milked 1300 cows and carried a total of 1750 dairy stock for a production of six million litres of milk.
Paul Cunneen, from Property Brokers in Ashburton, said an 80ha lake on the farm had the potential to expand that irrigation over the entire farm and supply neighbouring properties as well.
"The abundant low-cost water supply allows further growth," he said. "With an 1100mm rainfall and further development in line with the current owners business plan, the farm would see a minimum of 1m kg MS produced."
San Pedro lies in the Soriano province of Western Uruguay and the farm is 140km in a direct line from Buenos Aires. The land is gently undulating and flat while the soil composition is mostly loamy with some gravels.
The bulk of the farm is covered with a perennial grass mix of fescue, white clover and New Zealand-bred ryegrass species, while the rest is improved native grassland or sorghum grown for grain. Oats and corn can also be grown as supplements and some of the grain sorghum produced on the farm is sold to agriculture co-operative Copagran.
More than seven kilometres of internal roading lead through the farm to paddocks that have been subdivided to eight hectares. These are irrigated by six centre pivots from the storage lake which has a capacity of 2.3m cubic metres of water collected from a secure catchment area of 53km2. Three submersible pumps can deliver more than 1m litres of water an hour, or 277.77 litres a second.
The lake also supplies stock water around the farm through a 35km-long underground supply network, with every paddock fitted with two water troughs of 2000 litres each.
A 50-bail rotary dairy was built in 2008 with an in-shed feeding system while close to it is a 600-cow concrete feedpad. Farm buildings include two implement/storage sheds and a calf-rearing shed.
Staff are accommodated in four houses, including a main home and two three-year-old houses.
For the past six months the farm has been leased and Cunneen said the development needed to be kick-started to realise its potential. He said the capital outlay in Uruguay was a fraction of the cost of New Zealand dairying and the owners had found it easy to do business in a country that encouraged foreign investment. Uruguay had a strong economy led by a stable centre-right government that had neutral tax laws with New Zealand and enabled the easy flow of funds, he said.
"The original business plan has only changed due to a change in shareholder circumstances and it has abundant potential to become a cash yielder.
"When the farm is fully developed, at US30 cents a litre milk price the annual forecast surplus is US$2.6m excluding finance charges. A big factor in sustainability of cashflow is that farm expenses forecast at approximately US$1.3m are about 35% of gross revenue. Compared to NZ this very low and helps underpin reliability of income.
"With stock and plant this represents a cash yield of about 13%."
The milk price for the farm's milk is now US49c/litre, equivalent to NZ$8.40/kg MS, and Uruguay prices tend to track the global milk price. The farm supplies milk company Ecolat and is paid monthly for the total milk supplied. Information from the vendors stated multiple companies existed to supply milk, with no requirement to own shares in a company.
Expressions of interest are being sought for the farm which can be viewed at www.propertybrokers.co.nz. For further details contact Cunneen on 0274 323 382, Chris Murdoch on 0274 342 545, or Rodger Letham on 0274 333 436.
