The Paraguayan beef industry has flourished despite several setbacks relating to foot and mouth disease (FMD) in recent years.
Despite this, and coupled with significant transport challenges that come with being a landlocked nation, the cattle herd has grown, prompting an increase in exports. In 2014 Paraguay‘s exports amounted to almost 280,000 tonnes, up 55 per cent over the past two years. Export value over the same period was up 70 per cent to $1.3 billion
Agriculture makes up a significant portion of the country‘s economy, with beef and soybeans its leading exports. Though the industry is primarily grass-fed, the high level of cross-breeding means the cattle perform well in the feedlot system. Paraguay‘s feedlots are often owned by processors, providing the plants with a ready supply of cattle, especially during the dry season. However, feed availability can be a challenge given long transport distances. With only 7 million inhabitants in the country, the Paraguayan industry is heavily focused on exports, with less than 20 per cent of production consumed locally. Paraguay recently surpassed Argentina among the world‘s largest beef exporters, almost an unthinkable scenario back when Argentina was considered an export powerhouse. Unlike Argentina, the Paraguayan government supports a very free market approach to agriculture which is conducive to exporting beef. Beef exports are viewed as a valuable economic engine for the country, rather than a “competitor that drives up costs for domestic consumers.
In the first three months of this year exports have increased again, up almost a quarter on the year at 67,000 tonnes. Despite having lost some of its dominance in recent years, Paraguay‘s largest export market continues to be Russia, taking 37 per cent of all exports in the first three months of 2015. Exports to Chile have been recovering quickly from an FMD-related market closure that began in late 2011 and lasted through 2012, and in Q1 of this year were up over a third on the year. Other key destinations include Hong Kong, Brazil and Israel. After almost four years the EU has recently lifted its ban on Paraguayan beef as a result of the FMD outbreak in 2011. Prior to the ban beef exports to the EU had been growing consistently. Shipments within the 1,000 tonne Hilton Quota‘ allocation are expected to have started as recently as last month. Paraguay exports most of its beef boneless and frozen. However, exports of chilled boneless cuts have grown significantly in recent years due to the re-opening of Chile, and a continued growth of exports to Brazil. The possibility of exporting outside the Hilton Quota‘ to the EU may drive shipments of chilled product even further.
The heavy Brazilian investment in Paraguay‘s cattle and beef industry is a sign of the country‘s potential. Brazilian producers are bringing expertise and capital into the country, as well as some production practices. For example, Paraguayan cattle used to be castrated, but now it is more common to see young bulls in the feedlots and plants. Like Brazil, Paraguay does not allow hormonal growth implants, so not castrating cattle helps with efficiency. Despite being small compared to the world‘s largest exporters, the Paraguayan beef industry appears well-positioned for continued growth, the expectation is that the cattle herd will grow to be near 20 million head by 2020. Looking ahead, it is likely that Paraguayan beef will remain competitive on the global markets. In addition, with the re-opening of the EU market there is the possibility of the opening of other markets which follow EU standards.