NZ Farming Systems Uruguay, the South American dairy unit of Singapore-based Olam International, has sold some 7,771 hectares of farm land in Uruguay to local interests for about US$53.7 million in gross cash proceeds.

The transactions would free up cash "for redeployment into more value-accretive projects," Olam said in a statement.

About 1,769 hectares in west Uruguay was sold to farming group Nalmer Sociedad Anonima, while retaining access for the next two years via a lease. It sold 6,002 hectares in the east to Galperin Group, and will lease the land back for 12 years with renewal by mutual consent.

Olam expects to book a pretax gain of about US$18 million once the transactions are completed in the fourth quarter, it said.

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Olam moved to 100 per cent ownership of Farming Systems in late 2012, having taken control the previous year. Farming Systems first listed on the NZX in 2007 with the aim of building a dairying business based on New Zealand farming techniques in the South American country, where land was comparatively cheap and the industry relatively undeveloped.

It was later caught by the global financial crisis, which dried up access to credit, while drought sapped production. Olam came to the rescue with debt assistance.