Throughout its history, agriculture in Paraguay has been the mainstay of the economy. This trend has continued today and in the late 1980s the agricultural sector generally accounted for 48 percent of the nation's employment, 23 percent of GDP, and 98 percent of export earnings.Seyler, Daniel. "Agriculture". In . The sector comprised a strong food and cash crop base, a large livestock subsector including cattle ranching and beef production, and a vibrant timber industry.
Growth in agriculture was very rapid from the early 1970s to the early 1980s, a period when cotton and soybean prices soared and cropland under cultivation expanded as a result of agricultural colonization. Growth in agriculture slowed from an average of 7.5 percent annual growth in the 1970s to approximately 3.5 percent in the mid-to-late 1980s. Agricultural output was routinely affected by weather conditions. Flooding in 1982 and 1983 and severe droughts in 1986 hurt not only agriculture, but, because of the key role of the sector, virtually every other sector of the economy as well.
In the aggregate, however, the advances experienced by the sector during the 1970s and 1980s did not reach many of the small farmers, who continued to use traditional farming methods and lived at a subsistence level. Despite the abundance of land, the distribution of the country's farmlands remained highly skewed, favoring large farms. Epitomizing the country's economic activity in general, the agricultural sector was consolidating its quick expansion over the two previous decades and only beginning to tap its potential in the late 1980s.
Land tenure The history of land tenure in Paraguay is distinct from that in most Latin American countries. Although there had been a system of land grants to conquistadors, Paraguay was distinguished by Jesuit reducciones that dominated rural life for over a century.Seyler, Daniel. "Land tenure". In . After the expulsion of the Jesuits in 1767 and later the Spanish, the state had become the owner of 60 percent of the country's land by the mid-19th century. Large tracts of land were sold, mostly to Argentines to pay the country's war debt from the Paraguayan War. This was the beginning of the concentration of land in Paraguay not in the hands of the Spanish or of a local elite but rather of foreign investors. Land policy remained controversial until the 1930s, when there was a broader consensus for the titling of land to users of the land and mediating between latifundio and minifundio (small landholding). After 1954, multinational agribusinesses, mostly Brazilian and American, played an increasing role in the economy, often purchasing enormous tracts of land devoted to raising cattle, cotton, soybeans, and timber.
The most striking change in land tenure from 1956 to 1981 was the kind of ownership of the farms. In the 1956 census, 49 percent of all farmers squatted on their land compared with only 30 percent in the 1981 census. This data suggested an increasing interest on the part of small farmers in obtaining title to their land in the face of growing land pressures. The 1981 census also indicated that 58 percent of all farms were owned outright and 15 percent were sharecropper farms; the 1956 census showed that 39 percent of farms belonged to farmers and 12 percent were worked by sharecroppers.
Another striking element of the 1981 agricultural census was the great disparity between small and large landholdings. According to the census, 1 percent of the nation's more than 273,000 farms covered 79 percent of the nation's farmland in use. These large farms had an average landholding of almost 7,300 hectares. Many of the largest holdings were cattle farms in the Chaco Department. By contrast, the smallest farms, which made up 35 percent of all farms, covered only 1 percent of the land, making the average size of a minifundio 1.7 hectares, or less than was necessary for one family's subsistence. Still, the 1981 census figures were somewhat more encouraging than those in the 1956 census, which showed that 1 percent of farms covered 87 percent of the land, and 46 percent of farms covered only 1 percent of the farmland. Another encouraging trend that the census quantified was the declining number of farms under 5 hectares in size and the growth of small to medium-size farms (5 to 99.9 hectares).
Despite these positive trends, the 1981 census pointed to an increasing problem of landlessness. Census figures indicated that roughly 14 percent of all peasants were landless. Landlessness historically had been mitigated by the undeveloped nature of the eastern border region. Because the owners of estates in the region used only a portion of their holdings, peasants could squat on the properties without retribution. Land pressures also were alleviated by the vast tracts of untitled land in the east. Beginning in the 1960s, however, competition for land in the area increased dramatically. Many estate owners sold their lands to agribusinesses; the new proprietors, who were committed to an efficient and extensive use of their holdings, sometimes called upon the government to remove squatters from the lands.
Squatters also came into competition with Paraguayan colonists and Brazilian immigrants. Thousands of colonists were resettled in the eastern region under the government's agrarian reform program. The Brazilian immigration occurred as a result of a dramatic increase in land prices in the 1970s in the neighboring Brazilian state of Paraná. Many farmers sold their properties and crossed into Paraguay, where land was much cheaper. By the late 1980s, at least half of the population in the Canendiyú Department and Alto Paraná Department was Brazilian.
Land reform and policy After decades of public controversy over government land policy, two important agrarian laws were enacted in 1963 that guided land policy through the late 1980s. The Agrarian Statute, as the laws were called, limited the maximum size of a single landholding to 10,000 hectares in Eastern Paraguay and 20,000 hectares in the Chaco, with landholdings in excess of this size subject to taxes or possible purchase.Seyler, Daniel. "Land reform and land policy". In . This law, however, like many of the laws involved in economic policy, was enforced only loosely or not at all. A more fundamental component of the Agrarian Statute was the creation of the Rural Welfare Institute (Instituto de Bienestar Rural—IBR) in 1963 by Juan Manuel Frutos Fleitas, a minister in the Stroessner government. The IBR, which superseded the Agrarian Reform Institute, became the central government agency mandated to plan colonization programs, issue land titles to farmers, and provide new colonies with support services such as credit, markets, roads, technical assistance, and other social services as available. From 1963 to the late 1980s, the IBR titled millions of hectares of land and created hundreds of colonies, directly affecting the circumstances of roughly one-quarter of the population. In the late 1980s, the IBR remained the key government agency, along with the Ministry of Agriculture and Livestock, in serving the land needs of small farmers.
Although the IBR played an important role in stimulating the celebrated "March to the East," the exodus from Paraguay's central zone to the eastern border region that began in the 1960s was a spontaneous process. The task of the IBR was so enormous and its resources so limited that many of the country's farmers bypassed the institute in order to participate in the eastward land grab. Thousands of Paraguayans took it upon themselves to trek eastward to the abundant, fertile, but forested land of Alto Paraná, Itapúa, and other eastern departments. Many of the colonists were pioneers in the truest sense, clearing densely forested areas for farming mostly by axe. Few farmers had access to institutional credit, and these newly colonized areas generally lacked schools, roads, and other amenities.
Land use Paraguay comprises a total of 40.6 million hectares of land. But based on soil surveys, analysts have estimated that only one-fifth of that area is appropriate for normal crop production.Seyler, Daniel. "Land use". In . According to the 1981 agricultural census, 7 percent of the land was dedicated to crop production, 20 percent to forestry, 26 percent to livestock, and 47 percent to other purposes. Theseortant trends in Paraguayan agriculture was the increase in the percentage of land under cultivation, which had been only 2 percent in 1956. Livestock activity fluctuated greatly during the 1970s and 1980s but generally had increased, rising above the 22-percent land use reported in 1956. The improved utilization of agricultural resources resulted from increased colonization, favorable price movements for cash crops, further mechanization, and infrastructural improvements connecting produce with markets.
For agricultural purposes, the country can be divided into three regions: the Chaco, the central region, and the eastern region. The semiarid Chaco contained extensive grazing land that supported 40 percent of the country's livestock. Although the Chaco region covered 60 percent of the country's land mass, it contained only 3 percent of the population and accounted for less than 2 percent of crop production. With the exception of the Mennonite colonies in the central Chaco, there was little crop activity. A more suitable location for crops was the central region in the vicinity of Asunción, where traditional crop production had dominated since peasants were pushed toward the capital at the end of the Paraguayan War. But government policies since the 1960s had favored breaking up minifundios in the central region and establishing larger, more efficient farms in the fertile eastern border region, which is endowed with rich, varied soils, well distributed annual rainfalls, and millions of hectares of hardwood forests. Together these regions cover some 16 million hectares, 40 percent of the country's land and approximately 98 percent of the country's crop land. Agricultural surveys in the east, the new focus of agricultural activity, have determined that 30 percent of the region is suitable for intensive agriculture, 40 percent for livestock, 20 percent for moderate agriculture or livestock use, and 10 percent for forestry.
The country's land use changed rapidly in the 1970s and 1980s as foreign investment, Paraguayan and Brazilian colonists, the construction of Itaipú, favorable commodity prices, and new infrastructure all contributed to the penetration of the dense eastern region. Increased prices for soybeans and cotton beginning in the early 1970s changed the Paraguayan landscape more drastically than any other factor. By the late 1980s, cotton and soybeans accounted for over 1.1 million hectares, or over 40 percent of all land in crops and contributed over 60 percent of exports. Although government policies favored export crops, the rapid expansion of cash crops was largely a direct response that Paraguay's free-market economy made to the rise in the international demand for these products.
Production In 2018, Paraguay was the 6th largest producer of soy in the world, with 11 million tons produced (behind the US, Brazil, Argentina, China and India). In the same year, the country produced 5.3 million tons of maize, and 6.1 million tons of sugarcane, ranking 21st in the world in both; this year, the country also produced 3.3 million tons of cassava, 892 thousand tons of rice, 722 thousand tons of wheat, 223 thousand tons of orange, 116 thousand tons of yerba mate, 107 thousand tons of sorghum, in addition to smaller productions of other agricultural products.Paraguay production in 2018, by FAO
Crops
Soybeans