One of the Brazilian’s soybean expansion border
The third largest country in terms of soybean cultivated area in Latin America is finally slowing its pace. Paraguay is forecast to grow at just 1% in the next season, reaching a mark of just over 3.5 million hectares of the oilseed. This growth could achieve a higher mark if soybean prices in the country were better and if the rising costs of production were not at such a high level. According to Cooperativa Colonias Unidas (CCU ), the price paid per tonne of grain is now placed between the range of US $ 280 to US $ 295. By comparison that price used to be US $ 410 in 2013/2014.
Even under this difficult market situation growers could not be more satisfied with the current season. The record of 9.2 tonnes per ha in 2015/2016, according to USDA , was achieved by the combination of the modernisation of soil management and biotechnology, now covering over 99% of Paraguay’s oilseed area.
Although Paraguay was always a traditional soybean growing country, in the 1970’s Brazilian families immigrated to take advantage of the lower production cost compared to Brazil. As a payback they modernised the already established farming system and consequently reached the top 10 most efficient countries in oilseed production. The ‘Braziguayans’, as they are called, turned the country into an extension of Brazilian soybean area and brought with them the ‘cooperative model’ in order to adapt and improve the regional commerce. By this new model, many Brazilian cooperatives extended their influence over Paraguay and are currently supporting both countries.
Paraguay is highly dependent of the soybean market, which represents over 40% of the total export revenue. Yet, to recreate historical growth, farmers will need to receive government support to stay competitive in the market. According to APS, a local association, the area will only grow again in 2017/2018. Before that, the oilseed crop will not be competitive enough to encourage growers to expand their lands.
There are up to 2.5 million hectares yet to be expanded. Will Brazilian’s cooperatives and the Paraguayan government aid and assist this land full of potential?
LATAM - Amis Product Manager