MercoPress. South Atlantic News Agency

Paraguay set to double farm output in “next few years”

Paraguay Mercosur junior member and one of the poorest countries in South America (per capita income 4.500 US dollars) has gained more from world soaring food prices in terms of the boost to its trade balance than any other nation in the region.

According to International Monetary Fund estimates food price rises in 2007-08 increased Paraguay's trade balance by 12.2% of its 2005 GDP, the only country worldwide to have a double-digit increase. Although the IMF report does not take into account currency fluctuations or the escalating price of fertilizers and fuel, it does illustrate the agricultural potential of smaller South American countries such as Paraguay, Guyana and Uruguay. Paraguay has become the world's fourth largest soybean exporter with production doubling in two years helping boost exports by 77% in 2007 and the overall performance of the economy, 6.4% last year, the highest rate in two decades. After a serious drought two years ago, soy production leapt to 6.8 million tons in 2008 from 3.6 million in 2006, according to the Paraguayan Chamber of Cereals and Oilseeds Exporters. "But it could reach 15-18 million tons in the next few years," says Germán Ruíz, vice-president of Paraguay's Rural Association. Corn, sunflower and canola production also nearly tripled between the 2004/05 and 2006/07 seasons and wheat has risen, though more slowly. Héctor Cristaldo, president of a confederation of farm unions, sees "massive migration" out of cotton, a traditional staple, into sesame, a new cash crop that is entirely exported to Japan and Korea. Attracted by tax breaks on machinery imports and a corporate rate of 10% investors from Brazil, Argentina and Uruguay are moving into Paraguayan farming.