Emerging Markets / February 20, 2017

Agricultural Markets and Meat Production in Paraguay

Paraguay is a mid-size Latin American country with a total territory of more than 400.000 square kilometers, which is slightly smaller than the size of California. Likewise, Paraguay has a total population of 6.9 million citizens and is landlocked at the heart of South America. Nevertheless, Paraguay is a member of the Common Market of the South (Mercosur) regional bloc, which brings together Uruguay, Argentina, and Brazil into an economic union. Venezuela, which is also a Mercosur member, is currently suspended. Meanwhile, other South American countries, such as Bolivia, Chile, and Ecuador, hold the status of associate members within Mercosur.

With an annual gross domestic product (GDP) of more than US$60 billion, the Paraguayan economy is divided into 17% agriculture, 27% manufacturing, and 56% services. However, the agriculture industry utilizes over 50% of the national territory, while another 44% is forested. Meanwhile, the Paraguayan agricultural industry employs up to 27% of the labor force, while manufacturing employs about 18% and services employ another 55%. In terms of manufactured products, Paraguay produces cement, textiles, beverages, wood products, steel, and base metals. Within the agriculture industry, the country’s leading products include cotton, sugarcane, soybeans, corn, wheat, tobacco, cassava, manioc, tapioca, fruits, vegetables, beef, pork, eggs, milk, timber, and lumber. Similarly, in terms of trade, Paraguay’s most important partners are Brazil, China, and Argentina. This article explores the status of agricultural markets in Paraguay.

Agricultural Markets and Meat Production in Paraguay

Like its neighbors, Argentina and Uruguay, Paraguay has a large cattle population and is a large producer of meat products. When it comes to measuring meat products by weight, one of the units frequently used is carcass weight equivalent (CWE), which includes the weight of nonedible parts of the animal, such as bones, with the weight of the meat itself. During 2017, beef production in Paraguay is expected to reach 590.000 tons CWE. At the same time, the overall size of the cattle herd in Paraguay has decreased from 14.4 million head in 2014 to 13.6 million head in 2016.

Paraguay’s beef output is highly dependent on international market prices, given that more than 60% of the country’s beef production is destined for export. Therefore, international market prices play a key role in determining the amount of beef produced in Paraguay. For example, the low market prices that have prevailed in recent years, have led to steady, if slight, decreases in meat output. Amongst Paraguay’s top export markets for beef products are Russia, Chile, and Brazil, which together account for more than 70% of the country’s beef exports. Overall, Paraguay exports an annual average of 390.000 tons CWE of beef. Furthermore, amongst Paraguay’s growing export markets are Asian and Middle Eastern countries, such as Egypt, Taiwan, Iraq, Iran, Qatar, Israel, and China.

In terms of domestic consumption, the amount of beef consumed annually by the Paraguayan market has gone from more than 220.000 tons CWE during 2016 to an expected total of 196.000 tons CWE for 2017.

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