June 8, 2005

Paraguay visibly transformed by soy boom

A soybean boom has started in South America and it is largely because of China's escalating demand for soy imports. Argentina, Brazil, Uruguay and Paraguay have been making the best of the situation and are in competition to provide China with the soy it needs as it faces such exponential economic growth.

Between 1990 and 2004, Argentina and Brazil increased their land under soybean cultivation by more than 236 percent. In comparison, US production contributed only 35 percent to the world's soy output when it used to supply about 80 percent back in 1982. US soy acreage now stands at about 72 million acres, dwarfed by Argentina and Brazil's 91 million acres.

This boom has brought about widespread economic changes to those countries mentioned above. For example in Paraguay, the soy acreage has grown five times, and soy now represents 10 percent of Paraguay's GNP and accounts for more than 50 percent of the country's exports.

Carlos Pegoraro, manager of a group of 8 soybean cooperatives called Unicoop, said two phenomena are likely chiefly responsible for the boom in Paraguay. The first is the arrival of multinational agribusiness firms, especially the US grains conglomerate, Cargill.

Secondly, pioneering farmers from across the border in Brazil are pushing the soybean trade inland by clearing land and extending production not only to other Brazilian states but into eastern Paraguay as well.