As with other commodity-driven Latin American economies based on a single primary sector, Argentine and Uruguayan export-led growth from 1830 to 1900, and the diversification of those nations' economies, was founded on the burgeoning wool industry.
Explorers and traders first brought sheep to the Southern Cone in the sixteenth century. During the colonial period, however, there was no significant wool industry. In the seventeenth and eighteenth centuries, small numbers of the Spanish Merino breed were brought from Spain to Chile and Argentina, but they had little impact on the local sheep stocks. In Argentina the Pampa sheep (descended from the Spanish Churra) and the smaller Criolla produced coarse wool and a finer red wool, respectively. By 1757 the sheep population of Montevideo had reached 71,000, with tens of thousands more in the Río de la Plata region. But it was only after 1810, following a trend in Europe, that Southern Cone ranchers began to take an interest in herd improvement and the quality of wool shorn. Ranchers imported purebred sheep from Germany, Spain, France, the United States, and Australia. They introduced breeding programs and developed fine-wool flocks.
In Argentina, civil war impeded sheep breeding and the emergence of a wool industry until the mid-nineteenth century. In 1822 wool represented only 0.94 percent of total exports from the province of Buenos Aires. By 1851 that figure had risen modestly to over 10 percent. Ranchers bred the Argentine Merino as a larger animal producing medium- to fine-quality wool for export. By 1855 Argentina was exporting 10,000 tons of wool annually, mostly for textile mills in Europe and the United States. In an effort to stimulate wool production, Chile's Sociedad Nacional de Agricultura encouraged the introduction of new methods in animal husbandry. Late nineteenth-century Uruguayan flocks were similar to the European Merinos but produced a high-quality "Montevideo wool type" that enhanced the reputation of the Río de la Plata region's wool exports.
During the mid-1800s, wool production in Argentina and Uruguay determined the integration of the region into the world market. Wool exports grew quickly after 1840 and spurred Argentine and Uruguayan export-led growth. In 1840 Argentina exported less than 2,000 tons of wool. By 1870, 237,000 tons had been shipped overseas (55,000 tons in 1870 alone). From 1875 to 1900, a rapid expansion in the sheep population signaled the emergence of Argentina and Uruguay as world leaders in wool sales. Chile's production lagged behind, while Paraguayan exports were negligible. In Argentina, sheep raising was concentrated chiefly in the provinces of Buenos Aires, Entre Ríos, Corrientes, Santa Fé, and Córdoba (though in the twentieth century, the wool industry expanded to other regions, most notably Patagonia).
Like many Latin American commodity values, wool prices fluctuated quickly. In one case that characterized the relation between wool production on the pampa and world markets, production in Argentina and Uruguay rose with a price increment attributable to the Crimean War and the consequent withdrawal of Russian exports to the European market. But in 1857–1858, with the return of Russian production, prices for Argentine and Uruguayan wool dropped promptly. This pattern of rapid price fluctuations characterized cycles of strong and moderate growth in the wool industry during the late nineteenth century. For the most part, wool-industry profits were high for the estancieros (ranchers), the middlemen, and the shipping houses in Buenos Aires and other littoral ports.
Many factors shaped the wool industry during the late-nineteenth-century expansion. At times, labor and land shortages limited expansion. By contrast, the growth of local credit availability in Buenos Aires and the building of rail lines through many provinces enhanced export opportunities. The export sector was further stimulated by the rise in the international demand for wool as Germany, France, and Belgium followed the British lead into textile industrialization. By 1880 wool represented half the value of Argentine exports; in 1895 the sheep population in Buenos Aires Province alone reached 84 million, reflecting the leading role wool played in the provincial economy. In the final years of the nineteenth century, however, cereals and meat overtook wool in relative importance to Argentine and Uruguayan sales abroad. Wool did not regain its position of primacy in the Río de la Plata region economy but remained a vital sector of production in the twentieth century.
After 1900 Argentina and Uruguay continued to lead the region in wool production. Chilean exports during the twentieth century were moderate, while Paraguay produced little wool. Between 1934 and 1954, Argentina's share of world wool exports ranged from 10 percent to 14 percent. During this period Argentina began large-scale production of wool textiles but, as it had earlier in the century, continued to import large quantities of finished wool goods. In 1937 Argentina imported 2,027 tons of woolen and worsted piece goods, principally from the United Kingdom and Italy. In 1938 the 151,877 tons of wool exported accounted for 11 percent of Argentine exports by value. During the 1930s the principal importers of wool from Argentina were the United Kingdom, Germany, France, the United States, Belgium, and Italy.
By mid-century Argentina's sheep population was the third largest in the world after Australia's and the Soviet Union's. A 1952 census placed the Argentine number at 54 million. The annual consumption of wool by a substantial domestic spinning and weaving industry stood at 60,000 tons. During the 1950s Argentina ranked as the world's fourth largest raw-wool producer, exporting an average 330 million pounds of wool and sheepskins. Chile exported 50 million pounds of wool annually over the same decade, while Paraguay's overseas shipments were negligible. Uruguay ranked fifth in wool exports, with annual shipments of 115 million pounds. After the 1960s, despite sometimes heavy annual fluctuations, wool exports remained steady over the long term. Producers were unable to eliminate foot-and-mouth disease from herds and contended that the industry was limited in the late twentieth century by a lack of credit and government marketing supports. Between the 1970s and the 1990s, wool production dropped to half its post-World War II levels. In the twenty-first century, however, Argentina's wool industry has rebounded. A currency devaluation made imported wool expensive enough that domestic production increased dramatically, and simultaneously made Argentina's wool very competitive on the international market. Also, Argentina reduced export taxes on wool exports, an additional stimulatant to production.
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David M. K. Sheinin