Cattle ranching in Paraguay: an investor’s perspective
Our aim here is to give potential investors an inside perspective into cattle ranching in Paraguay.
In the next 50 years, a growing world population, rising affluence and urbanization will be driving a significant demand and resulting growth for livestock products. South America has long been a specialized beef sector, with 31% of global production, but there are still large undeveloped areas with cattle raising potential. Most notably, the Chaco region in Paraguay offers opportunities for added value investment through transforming low-cost undeveloped farmland into high production cattle ranches.
Naturally limited by the Paraguay and Pilcomayo Rivers, the Chaco plain extends northwest in the direction of Bolivia, with ever decreasing infrastructure, population and precipitations. Productive development follows the same pattern, being highest in the Humid Chaco (Bajo Chaco), the liable to flooding eastern plain along the Paraguay River.
Median Annual Temperatures, Annual Rains and Population Density in Paraguay
Sources: Army Geographical Service, National Meteorology Direction, National Direction of Statistics, Polls and Census
Urban settlements are concentrated in the central region. Japanese and Mennonite German colonies (Filadelfia, Loma Plata, Neuland and others) established in the 1920s have organized into marketing cooperatives that evolved into service centers, important dairy and cattle industries with good ties to national and global markets. Here pastoral farming is consolidated, with developed bovine genetics, forage improvement and specialized infrastructures such as silage and slaughter.
The Dry Chaco (Chaco Boreal) comprises Alto Paraguay and Boquerón Departments. Alto Paraguay is the better served by fluvial transport and has seen the highest technology and genetics investments by foreign owners (mostly from Brazil and Uruguay) absent but active. The area has a strong interaction with Central Chaco where the processing plants are located. Boquerón has more recent exploitations and is the new development area, particularly along paved trans-Chaco route 9 leading into Bolivia and the Pacific Coast.
The whole Chaco region has excellent conditions for semi-intensive cattle production, some of them derived from average farm size (1.850 ha), percentage of non-national producers (11.5%) and average cattle heads per farm: 450 versus 30 in the Oriental Region.
The prevailing business model among investors aims for land value appreciation through use transformation that drastically improves productivity, converting natural soil covers into pastures for semi-intensive cattle production. As in agriculture and forestry, there are syndication options -such as funds or collective farm ownership- designed to profit from the experience of local farm developers, reduce risk from imperfect title deeds and benefit from scale economies. In any case, a sound business plan dealing with investment, building, soil conservation, planting, animal breeding and husbandry, labor utilization and produce marketing is the first step.
Farm development operations start with mechanical land clearing. Environmental regulations call for no less than 25% of forest, woodlands or bush in the farm to be left intact, plus 100 m wide strips perpendicular to the prevailing winds every 500m and around the property plus bush borders at least 100m wide around all types of temporary or permanent waters. These areas may be included in a land use plan to benefit from fiscal incentives for forestry. They also may be integrated in silvopastoral projects to diversify products, provide shade and refuge, improve animal diet and reduce use of chemical fertilizers and concentrates.
Braford cattle feeding along internal road, shrub cleared, trees left intact.
Source: Consorcio de Ganaderos para Experimentación Agropecuaria
Infrastructure building typically includes paddock fencing, internal roads and water reservoirs, personnel housing, forage facilities, animal health and handling installations and shipping paddocks and tunnels.. If there is none nearby, an aviation track greatly simplifies access since public roads are few and not always paved or well kept. Some locations may need docking for cattle delivery to processing plants via river barges, of which Paraguay has a large fleet.
Chaco has natural grazing resources both in the “campos” (espartillo grasslands in the former river delta in Central Chaco) and in the mostly thorny bush lands or “montes”. However, selected grass and legume pastures established on cleared land increase ten-fold herd productivity per unit area. Stocking rates on cultivated pastures range from 0.5 to 2 US bovine units per hectare along the rainfall gradient in the south- east direction. Commonly cultivated grasses are Gatton, Buffel grass, Pangola and Nixon, combined with legumes Alyvag, Oxley, Filadelfia (native to the Chaco), Tarramba and Haifa. Other feedstocks are Silage Sorghum and maize, with sugar cane a typical emergency feed for prolonged drought periods, about every 10 years. There is strong seed production in Central Chaco mostly locally marketed between farms or via the cooperatives.
Most cattle in Paraguay is of the Criollo breed, derived from Spanish and later British cattle importations that produced a well adapted, small, highly fertile but low in production animal. Presently an increasing number of farms breed Zebu types (Nellore and Brahman) or their crosses with Angus and Hereford (Brangus and Bradford) to produce fast growing, environmentally adapted and resistant animals. Artificial insemination is practiced in well-organized cooperatives or large farms. Other producers buy prized animals at rural fairs in Argentina, Brazil or Uruguay to improve their genetics.
There is little public research in Paraguay -primarily because of scarce funds- but there are on-farm experimentation and technology dissemination activities. Cooperatives have extension services there are organized in CREA groups (Regional Consortium for Agricultural Extension) and a group of sustainable and profitable production systems conscious farmers privately organized the Cattle Breeders Consortium for Agronomical Experimentation that hosts an annual international congress on technology transfer. The Paraguay Rural Association organizes a big annual Agricultural Fair where cattle breeds, adapted pasture seeds and machinery are exposed and marketed.
Once infrastructure, pastures, herd and human resources are in place, production may be optimized to achieve sustainable development. Livestock accounts for a great part of green house gas emissions but also offers mitigation opportunities closely associated to productivity gains. Practices such as animal performance improvement (through genetics and health), better feeding (diet manipulation and forage availability), herd structure management (to reduce unproductive animals) and manure storage application and bio-digesting reduce GHG emissions while improving production and increasing profits. Paraguay is committed to sustainable us of the land as a development tool for its people.
Researcher for GTSA: Alice Bonet
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