The foundation for Uruguay's livestock-based economy was laid well before the nation achieved independence. In 1603 Spanish colonists released cattle and horses on the empty plains of what is now Uruguay, then known as the Banda Oriental (eastern side, or bank, of the Río Uruguay). The livestock thrived in ÍÍÍÍUruguay's temperate climate, grazing on the natural pastures that still cover most of the countryside. By the early 1700s, there were millions of cattle in the area. During the "leather age," which lasted for the next century and a half, Uruguay's abundant livestock attracted traders and settlers from the nearby Argentine provinces. Hides became the area's chief export. Cattle raising, which seems to have begun almost by chance, quickly took hold of Uruguay's rural economy.

The success of simple livestock-ranching techniques in Uruguay during the colonial period was to have long-term consequences. Uruguay's temperate climate, natural pastures, and abundant land (because of its small population during the colonial period) combined to favor extensive methods of raising cattle. For ranchers, these methods held two economic advantages. Both investment and labor costs were kept to a minimum because cattle ranged free, subsisted on natural grass cover, and required little care. Well after independence in 1828, even when Uruguay had become an important exporter of livestock products, these advantages continued to exert a great deal of influence on the rural sector. Despite the limitations of extensive livestock raising, including low production levels per hectare and slow growth of stock, few ranchers ever became convinced that more intensive production techniques were worth the cost. As a result, the fundamental method of livestock production in Uruguay changed very little in over two centuries.

Data as of December 1990