With a population of only 3.4 million, Uruguay is now known for its premium English breed of cattle that roam uninhibited in one of the best preserved pastures in the world. Gauchos (i.e. cowboys) clad in ponchos, swinging bolas, facos dangling down their leather belts, dot the middle plains. If gauchos hold a romantic place in popular imagination of Uruguay, so does the meat from the cattle they masterfully herd in bucolic plains and low-mountain ranges. Beef holds such a special place in Uruguayan culture that when the populist former president José Alberto "Pepe" Mujica ran the Ministry of Agriculture, he won the hearts of many Uruguayans with cheap access to assado, beef rib grilled over an open fire.
Today, Uruguay’s economy benefits from sizable exports of premium beef to the EU, the US, and most recently to China. In 2015, beef exports generated $1.5 billion in revenues and comprised 16 percent of the nation’s exports. The story of how this land, half the size of Germany with four times as many cattle as people, managed to whittle its way out of competition with its two giant neighbors, provides an insight into the astounding nature of the challenges that small nations face in achieving global prominence and testifies to the level of ingenuity and resourcefulness that policy makers and farmers have to resort to in order to succeed.
The Uruguayan government learned the necessity of proactively managing its high-end beef industry after weathering disaster. In 2001 an epidemic of Foot and Mouth Diseases (FMD) wiped out 6,900 animals. This came not long after Uruguay had worked hard to achieve the coveted “FMD Free Without Vaccination” status from the World Organization for Animal Health (OIE). All beef-exporting countries seek to obtain the “FMD Free Without Vaccination” status from OIE because it guarantees access to high-value markets such as in North America. But this is a gamble; a small outbreak in a neighboring country or one part of the country could spell disaster, as it did in 2001. (Uruguay still doesn’t hold this status.)
Authorities acted quickly and abated what would have turned out to be a disastrous outcome by implementing stringent laws on how beef production is managed. This paved the way for the adoption of an advanced tracking technology to better monitor and react to disasters. Since 2006, Uruguay has one of the most sophisticated supply chain tracing technologies in the world. Every calf raised in Uruguay is electronically tagged, and every player in the beef value chain player is obligated to subscribe to this system by law. This technology allows both consumers and authorities, home and abroad, to pin every morsel of meat to a particular animal and a particular lot. It also helps the authorities to check and audit the movement of all cattle across lots and slaughterhouses and acts as a central repository of information by which transparency is established and quality certifications are carried out.
Today, access to some of the highest-value markets for any food products comes from organic certification, a distinction created in various countries during the 1990s. In the United States, for example, the Organic Foods Production Act of 1990 authorized the creation of a National Organic Program (NOP) to consolidate fragmented organic state-by-state regulation dating back to the 1970s. By 2000, the NOP was finally established. In principle, organic certification aims to indicate which food products are safe, nutritious, and environmentally friendly. However, for individual cattle producers, obtaining a USDA organic certification could take up to three years and thousands of dollars in fees. Uruguayan beef, which markets itself as high-quality, wanted the international recognition, but organic certifications were simply too expensive and time-consuming to implement industry-wide.
As an alternative, Uruguay expedited the process by introducing the Certified Natural Meat Program, launched in 2001, in which voluntary ranchers and packers certify their produce to meet phytosanitary, quality and environmental standards according to a protocol administered by the National Meat Institute (INAC). Accreditation is carried out by international certifying firms. (see video)
This country-wide process not only allows its farmers access to high-end, international markets, but also functions as its own form of branding. Uruguay markets its beef as “Uruguay Certified Natural,” which in 2004 the USDA announced was “Process Verified,” essentially giving Uruguay’s certification an international stamp of legitimacy. “Natural” means that the cattle from which the beef comes is not injected with antibiotics or growth hormones and exclusively eats grass. In the beef market, grass-fed is valued highly for being tastier and healthier than its grain-fed equivalent.
Uruguay is now the second-largest exporter of beef to China, surpassing Australia. This is a huge shift for Uruguay considering that Europe used to hold that position only three years ago. While the underlying cause of this shift is demand from burgeoning middle-class in China that are increasingly seeking out grass-fed beef, Uruguay’s quick response to this demand is largely attributable to its small and highly integrated supply chain. Niche industries in smaller countries, it would seem, are much more adaptable.
This adaptation is critical to Uruguay’s success, as it must consistently comply with the evolving tastes and requirements of its old and new buyers. So far, Uruguay’s prescience continues as the USDA has proposed a stricter regulation to amend existing guidelines for how organic certified livestock producers raise their cattle. Key provisions include minimum indoor and outdoor requirements, physical alterations allowed, and treatment of cattle during transport and slaughter. For Uruguayan beef exports that are already a few steps ahead of the pack in this front, this represents a great marketing opportunity.
Diversifying the destination of Uruguay’s beef exports will be the important next step in solidifying its global prominence. The niche markets filled by Uruguayan beef could quickly disappear if its purchasing markets face an economic downturn. Fortunately, Uruguay’s movement east has mitigated this danger and ensures continued success into the future.