Paraguay Export Economy is Agriculturally Based

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Paraguay Export Economy is Agriculturally Based

Bordered by Bolivia, Argentina and Brazil, Paraguay. It lies firmly in the heart of South America. With a land area of just under half a million square kilometres, a country that is considerably smaller than its neighbours and has one of the  lowest population densities in the region. With few mineral resources, Paraguay’s economy revolves around agriculture.

The country name Paraguay originates from the Guarani word for a great river, the Parana River. Indeed, this river is so large that it provides Paraguay, a semi landlocked country, with access to the Atlantic Ocean, as well as enabling the country to generate a significant amount of hydroelectric power. Power is generated at two dams, one shared with Brazil and the other Argentina, which supply all of Paraguay’s electricity requirements and have enabled the country to become the largest exporter of hydroelectric power in the world.

The importance of Agriculture

The east of the country is lowland where much of the population reside, while to the west and north the land rises to dry plains. Paraguay has some mineral deposits but they are fairly poor and less than 15 per cent of the population is involved in mining or industrial activities. In contrast, over half the population is involved in agriculture and forestry, much of this being on a subsistence basis.

After the expulsion of the Jesuits and Spanish in the late 1700s, the state owned around 60 per cent of the land. However, large tracts were sold to Argentina to pay for debts incurred during the bloody War of the Triple Alliance (1865-70), fought against Argentina, Brazil and Uruguay, which claimed more than 1.2 million lives, including two-thirds of the adult male population. Land policy remained contentious until 1930, when there was a broader accord on titling. The 1950s saw large tracts of land bought by American and Brazilian multinationals for the purpose of raising cotton, cattle, timber and soybeans, and a census in 1981 revealed that 79 per cent of the nation’s farmland could be attributed to just one per cent of the 273,000 farms.

The History of Soyabean

Grown since the time of the Jesuit missions, cotton was once a principal crop for Paraguay. In recent years, however, it has been displaced by the explosive growth in soyabean production, which had all but replaced cotton by the 1980s. In 1970, less than 55,000 hectares were devoted to soyabean, but within twenty years this had increased by more than ten times, such that soyabean was cultivated on more land than any other crop and generated export revenues of over US$150 million. Soyabean production now represents 10 per cent of the country’s GDP and 50 per cent of its exports. In fact, Paraguay is now the forth largest exporter of Soyabeans in the world and is seen as one of the more reliable ones.

Other Crops

While soyabean production might dominate Paraguay’s agricultural landscape, it is by no means the only crop grown. Tobacco cultivation continues (although production has decreased), which is exported, along with coffee and hardwoods, such as quebracho and cedar. Food crops include maize, cassava, beans and peanuts, the staple crops traditionally grown by the indigenous Guarani.

Paraguay is the world’s largest exporter of Petitgrain, an essential oil used in aromatherapy, perfumes, cosmetics and flavourings. The bitter orange tree (Citrus Aurantium var. Amara), is also cultivated for the production of oil, harvested from the shoots and leaves by steam extraction.

Meatpacking, cement production, sugar processing, textiles and brewing make up the industrial contribution to Paraguay’s economy.

Paraguay has achieved reasonable political stability with the National Republican Association-Colorado Party in power which has lead to a number of years  of strong growth thanks to its progressive investment policies.

Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.

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