Press release number: IFAD 19/01

Rome, 4 July - A USD 24.50 million programme in the Eastern Republic of Uruguay, the ''National Smallholder Support Programme – Phase II'' will receive a USD 14 million loan from the International Fund for Agricultural Development (IFAD). A loan agreement was signed today at the Fund’s Headquarters by Ambassador Julio Cèsar Lupinacci and Mr. Lennart Båge, President of the Fund.

In Uruguay’s agricultural sector, rural poverty has been a persistent feature especially for the landless rural workers; the causes for this have varied. Recently however, Uruguay’s small holders have been exposed to acute fluctuations in international markets as regards agricultural inputs and commodities. Due to this, they are presently losing their competitiveness within the context of the Southern Cone Common Market (MERCOSUR). One of the main causes of rural poverty in the country is this vulnerability, combined with the fact that smallholder products are not linked to value-added marketing chains. Additional causes that have led to rural poverty are the decreasing employment opportunities and job security, leading to youths migrating to the cities.

The first IFAD financed project in Uruguay – PRONAPPA concentrated on creating an efficient technical assistance service and establishing a financial system for credit and guarantees. The National Smallholder Support Programme – Phase II (Pronappa II) has been created for a follow-on phase to strengthen local producer organziations, promote the participation of financial intermediaries in the credit programme, and initiate a gradual process of transfer and privatization of services.

The target group for the proposed programme is estimated at 43 000 families which represent approximately 45% of the rural population across the country. About 10 000 rural poor families will benefit directly from the programme, over a proposed implementation period of six years. There are three main types of target group families – a) rural, marginal producer families – where agriculture is only a part of their family income; b) landless rural families – which is the group most affected by urban migration and c) rural families with commercial potential – who depend mostly on farm income and family labour.

The main objective of the National Smallholder Support Programme is to contribute to alleviating rural poverty by raising the income levels and living standards of the rural poor. It’s aim is to increase the value added to agricultural production through crop diversification, a boost in productivity and the creation of employment opportunities for landless male and female workers. The programme will support the creation of a sustainable institutional framework and permanent operational mechanisms to combat and prevent rural poverty. Through an analysis of the regional market for agricultural commodities, economic niches for poor, small farmers are possible in the MERCOSUR framework, provided their farming operations are modernized. Vegetables, fruit and dairy products are the key commodities where small farmers in Uruguay hold a comparative advantage compared to medium and large sized producers; IFAD’s aim therefore is to continue focusing on diversification towards more competitive commodities.

Beneficiary organizations are expected to participate directly in all aspects of the programme’s implementation and evaluation. They will be included in municipal service fairs and Rural Development Round Tables – which analyze proposals and approve resources for technical assistance subprojects;

With this programme, IFAD will have financed two projects in the Republic of Uruguay, for a total loan amount of about USD 25.72 million.

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IFAD is a specialised agency of the United Nations with the specific mandate of combating hunger and poverty in the most disadvantaged regions of the world. Since 1978 IFAD has financed 584 projects in 114 recipient countries and in the West Bank and Gaza for a total commitment of approximately USD 7.2 billion in loans and grants. Through these projects, about 250 million rural people have had a chance to move out of poverty. IFAD makes the greater part of its resources available to low-income countries on very favourable terms, with up to 40 years for repayment and including a grace period of up to ten years and a service charge of 0.75% per year.