Paraguay's Agriculture Ministry has announced between 6 and 7 million tons of soybeans were to be harvested this season against the original projections of 10 million due to the unprecedented weather conditions.
The current drought had led Paraguayan authorities to recalculate their projections, which has resulted in a 40% drop when compared to previous estimates. Paraguay is the world's fourth largest exporter of soybeans, which may affect the international price of the product, it was reported.
Agriculture Minister Moisés Bertoni explained that “the calculation of 10 million tons of soybeans was made based on an average of 2,840 kilograms per hectare, which the Government now knows cannot be achieved. It could reach 6 or 7 million depending on the probability of rain we have,” Bertoni added.
In some Paraguayan towns, such as Santa Fe del Paraná, some producers have reported losses of 70% to 100% in some batches.
Bertoni also explained the Government was devising a contingency plan to be put into effect before the harvest, unlike in other similar crises in 2015 and 2019. The initiative seeks to help more than 20,000 small producers, by reducing their corporate income taxes and also providing for lines of credit through the state-run Banco Nacional de Fomento.
Soy and its byproducts are Paraguay's main export item, which is why the current situation causes great concern among Government officials, since it will hit the entire national economy beyond agriculture, according to Bertoni.
“Simply when looking at the behavior of the agricultural GDP with the national one, we see that there are two almost parallel lines that rise and fall according to the performance of agriculture. A bad agricultural year has effects on the entire economy of the country,” Bertoni explained.
In addition to the agricultural performance, other considerations need to address the logistics situation. Most exports are shipped through the Paraná River, which during 2021 suffered the worst downspout in the last 50 years.