Paraguay: The World’s Sixth Largest Soy Producer

From 1980 to 2000, the country of Paraguay, landlocked between Brazil, Bolivia, and Argentina in South America, experienced a period of economic stagnation. During the last decade, however, it has enjoyed real economic growth. In fact, in 2010, the country’s GDP expanded by 15%, which is the fastest rate in Latin America.

What’s driving the economic expansion? In a word: Soy. The soybean is the country’s principal product and it has been able to leverage recent increases in international prices, which were spurred by Chinese demand and the purchase from EU countries to produce biodiesel. This has now made Paraguay the world’s sixth largest producer and fourth largest exporter of soybean. Given the country’s relative size compared to the top three exporters—U.S., Brazil, and Argentina—it is fair to say that nowhere is the local impact of soybean so significant.

Soybeans are grown in the southern most region of Paraguay, with the major growing area occupying a belt along the southeast border of the nation. They’re planted from the first of October through the end of December. Harvesting begins around the first of March and runs through the end of June.

The first soybean boom occurred in the 1970s. Since that decade, millions of hectares of subtropical woodlands in Eastern Paraguay have been cleared to grow soybean. At the same time, the expansion of the agricultural frontier brought big changes in land ownership, which became much more concentrated, especially in the Eastern departments of Alto Paraná and Canindeyú, where thousands of Brazilian settlers arrived with the needed resources and means to set up the large-scale farms. There were issues, however, among the Paraguayans with many nationals displaced because they didn’t have the income for mass soybean production.

Today with the newfound soybean boom, there is an increasing debate within the Paraguayan society about the pros and cons of production. On the positive side, revenues for soybean exports provide a unique opportunity for the country to begin a development process that has been long postponed. What’s more, soybean production has helped the international insertion of some economic sectors and has boosted the proliferation of a modern service sector related mostly to this boom: industries such as banking, communications and construction. Critics of the present model of soybean farming warn that such a boom is not healthy for the client to  become so reliant basically on two products: soybean and meat (the other boom Paraguay has experienced). They worry about the potential of environmental damage due to intense deforestation, the increase in the use of chemical and fertilizers, which poison the land, the water and the surrounding land of small farmers with the subsequent health problems of the affected communities.

While this debate wages on, the fact is that soybean production will continue, contributing to Paraguay’s economy.