The Context

Uruguay stands out in Latin America for being an egalitarian society with a high per capita income, low levels of inequality and poverty, and almost complete absence of extreme poverty. Two main characteristics – a solid social contract and economic openness – paved the way for Uruguay to reduce poverty and promote shared prosperity over the last decade.

Uruguay is a traditional exporter of agricultural commodities. It has a well-developed agro-industry and livestock sector that mainly draws on Uruguay's wealth of natural and agricultural resources. Agricultural exports include beef, fine wool, rice, grain, dairy products and honey.

Despite a national reduction in poverty that reaches 8%, some rural people continue to live in poverty, isolation and vulnerability. Poverty concentrates in the north and northeast areas of the country.. For the most part, the rural poor are young men and women who lack the economic resources and training to generate profitable businesses. In female-headed households, poverty is 2% higher than those male-headed.

Small farmers are also facing growing difficulties in accessing increasingly competitive domestic and international markets. The great majority of the rural poor are rural workers occupied in non-agricultural activities.

Poverty reduction is a priority for the Government, which has implemented a range of social and economic policies to combat it and to widen social inclusion. But given that the bulk of these policies have focused on urban areas, poor rural people have felt little significant impact. There is a need for public service provision to smallholder family farmers, and particularly rural workers and other vulnerable groups among the rural population.

The Strategy

Since 1993, IFAD has played an important role in Uruguay's poverty reduction.

The IFAD-funded Uruguay Rural Project (PUR) 1 played a key part in setting up rural development institutions and policies. Among these were the General Directorate for Rural Development (DGDR), the agency responsible for implementing the country's rural development policies, and the Rural Development Round Tables (Mesas de Desarrollo Rural, MDR), a key instrument in promoting the participation of rural civil society in development.

The recently-completed Rural Inclusion Pilot Project (PPIR) focused on innovations in the areas of financial inclusion, strengthening of rural organizations and smallholder access to markets, with a view to subsequent replication on a national scale.

IFAD's advocacy work in Uruguay, supported by the Regional Programme FIDA-Mercosur 1, has been pivotal in establishing a nationwide policy dialogue on family farming that includes government and civil society. This ongoing dialogue allows the country to promote family farming and – in the framework of the recent operations (PUR and PPIR) – test tools and methodologies to secure adequate public service provision to improve the livelihoods of small family farmers, rural workers and the rural poor.