Sustainable production of key crops for export
Sustainable production of key crops for export
Business Model Description
Invest in the sustainable production and export of critical crops such as soybeans, sesame, corn, wheat, yerba mate, and sugar, with the option of organic production and/or with reduced amounts of fertilizers and/or synthetic fertilizers through: -Investment private to increase and/or establish plantations of new crops of essential agricultural export products -Private investment focused on cooperatives and small farmers to increase and improve the quality of key crops such as sesame, corn, and sugar.
Expected Impact
Providing new productive models to increase agricultural income, reduce poverty and vulnerability and contribute to a more sustainable environment
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Paraguay: Itapúa
- Paraguay: Alto Paraná
- Paraguay: Guairá
Sector Classification
Food and Beverage
Development need
76% of the total area of the country is used for agricultural activities. The agro-livestock sector is critical in Paraguay since, in 2010, this sector represented 28% of GDP (I).
Policy priority
The Ministry of Agriculture and Livestock made a Strategic Agrarian Framework in 2013. The objectives are, among others: strengthen the capacity of the agricultural sector and increase competitivity (II).
Gender inequalities and marginalization issues
Rural poverty disproportionately affects women and indigenous communities. Key factors contributing to poverty among family farmers include fluctuating prices, insufficient wages, low productivity, limited technology adoption, declining soil fertility, lack of access to financial services, among others (III).
Investment opportunities introduction
The opportunity to modernize family farming in Paraguay using more inclusive business models can accelerate poverty reduction, increase the productivity of the sector and help close inequality gaps (IV).
Key bottlenecks introduction
Paraguay faces infrastructure gaps that include high transport costs, limited connectivity, disparities in regional development, and health-related impacts (V).
Food and Agriculture
Development need
76% of the total area of the country is used for agricultural activities. The agro-livestock sector is critical in Paraguay since, in 2010, this sector represented 28% of GDP (I).
Policy priority
The Ministry of Agriculture and Livestock made a Strategic Agrarian Framework in 2013. The objectives are, among others: strengthen the capacity of the agricultural sector and increase competitivity (II).
Gender inequalities and marginalization issues
Rural poverty disproportionately affects women and indigenous communities. Key factors contributing to poverty among family farmers include fluctuating prices, insufficient wages, low productivity, limited technology adoption, declining soil fertility, lack of access to financial services, among others (III).
Investment opportunities introduction
The opportunity to modernize family farming in Paraguay using more inclusive business models can accelerate poverty reduction, increase the productivity of the sector and help close inequality gaps (IV).
Key bottlenecks introduction
Paraguay faces infrastructure gaps that include high transport costs, limited connectivity, disparities in regional development, and health-related impacts (V).
Pipeline Opportunity
Sustainable production of key crops for export
Invest in the sustainable production and export of critical crops such as soybeans, sesame, corn, wheat, yerba mate, and sugar, with the option of organic production and/or with reduced amounts of fertilizers and/or synthetic fertilizers through: -Investment private to increase and/or establish plantations of new crops of essential agricultural export products -Private investment focused on cooperatives and small farmers to increase and improve the quality of key crops such as sesame, corn, and sugar.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
In 2019, soybeans moved about US $ 1,746 million in exports, cereals (wheat, rice, corn, sorghum) moved US $ 806 million and fats - oils of animal/vegetable origin, moved US $ 549.7 million (2).
Indicative Return
10% - 15%
According to an analysis of the soybean cultivation under the organic production system obtained by the producer in 2010, at the Nuevo Gambach farm in the department of Itapúa, a profitability of 11.59% was obtained (3).
Investment Timeframe
Short Term (0–5 years)
A study of organic-operated sugarcane profitability in Jalisco, Mexico, published in 2018, was evaluated within 5 years (4).
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Soy is by far the most important crop in Paraguayan agriculture. It is the one that covers the largest planted area, the one with the highest volume produced, the most important for the generation of foreign exchange in the country (5).
The serious social and environmental problems generated by the high use of chemical biocides (known as pesticides, agro-toxins, agrochemicals, or agricultural defense) are increasingly widespread in areas very close to communities (6).
Gender & Marginalisation
Unequal income in rural areas and for women
Expected Development Outcome
Increase the proportion of the agricultural area in which productive and sustainable agriculture is practiced
Reduce diseases caused by pesticides
Reduce the pollution of rivers, channels, surface water, and underground waters
Gender & Marginalisation
Reduce income inequalities for rural population and women
Primary SDGs addressed
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
3.9.1 Mortality rate attributed to household and ambient air pollution
15.3.1 Proportion of land that is degraded over total land area
Secondary SDGs addressed
Directly impacted stakeholders
Planet
Gender inequality and/or marginalization
People
Indirectly impacted stakeholders
People
Outcome Risks
Risk of injury and illness in grouping and processing centers (7).
Generation of waste, odors, noise and dust (7).
Impact Risks
Decrease in soil quality (7).
Impact Classification
What
The outcome is likely to be positive because organizing and assisting small producers by bundling products to add value will help increase their income
Who
Small farmers are underserved due to a strong dependence on less efficient traditional systems
Risk
Although the model is proven for these types of crops and others, the principles of fair price must be considered, technical training and financial assistance must be provided
Impact Thesis
Providing new productive models to increase agricultural income, reduce poverty and vulnerability and contribute to a more sustainable environment
Enabling Environment
Policy Environment
The National Development Plan 2030 - Its goals include increasing the productivity of family farming and increasing the share of household income (8).
The 2013 Agrarian Strategic Framework - includes its objectives to contribute to the process aimed at improving the quality of life with substantive reduction of poverty in Family Farming (9).
National Plant and Seed Health and Quality Service (SENAVE), Rodrigo González Navarro, highlighted that the institution under his charge will continue to work on the processes to improve sesame quality and safety Paraguayan exports (10).
Financial Environment
The Development Finance Agency (AFD) - PROCRECER - Financing for investment projects. It finances projects such as - Rural, industrial, commercial, and service development projects (14).
Credit Agrícola de Habilitación (CAH) is a public entity that provides financial services and promotes technical assistance and marketing through alliances with the public and private sectors (15).
Exclusive credit for financing the national program of prioritized items for agriculture of the Ministry of Agriculture and Livestock (MAG). For investments directly related to productive activity, operating and marketing expenses at a rate of 10% per year on balance (16).
Regulatory Environment
Forestry Law 422/73 - All rural properties of more than twenty hectares in forest areas must maintain 25 percent of their natural forest area (11).
Law N ° 385 Seeds and protection of cultivars - aims to promote an efficient activity of obtaining cultivars; production, circulation, commercialization and quality control of seeds, among others (12).
Law No. 294/93 on Environmental Impact Assessment - establishes that it will require the presentation of Environmental Impact Studies for public or private projects or activities (13).
Marketplace Participants
Private Sector
Hypergrain CO. (Paraguay), Shirosawa Co. (Paraguay), Dulsan (Paraguay)
Government
Ministry of Agriculture and Livestock, Ministry of Industry and Commerce.
Multilaterals
IDB, Development Bank of Latin America (CAF)
Non-Profit
Fundación Paraguaya, Asociación Rural del Paraguay, Inter-American Foundation, Unión Agrícola Naciona (UAN), Paraguayan Chamber of Exporters
Target Locations
Paraguay: Itapúa
Paraguay: Alto Paraná
Paraguay: Guairá
References
- (I) Gobierno de Paraguay. 2014. Plan Nacional de Desarrollo Paraguay 2030. https://www.stp.gov.py/pnd/wp-content/uploads/2014/12/pnd2030.pdf (II) Ministerio de Agricultura y Ganaderia. 2013. Marco estratégico agrario. https://faolex.fao.org/docs/pdf/par179001.pdf (III) International Fund for Agricultural Development. 2016. Paraguay. https://www.ifad.org/en/web/operations/w/country/paraguay (IV) UNOPS. 2020. To grow, eat and sell: Modernizing agriculture in Paraguay. https://www.unops.org/news-and-stories/stories/to-grow-eat-and-sell-modernizing-agriculture-in-paraguay (V) OECD. 2018. Multi-dimensional Review of Paraguay. https://www.oecd.org/development/mdcr/countries/paraguay/Paraguay_Vol_1_Overview_En.pdf
- (1) Agencia de Cooperación Internacional del Japón. 2012. Estudio de recopilación de datos sobre cultivos potenciales para la exportación producidos por pequeños productores en el Paraguay. https://www.jica.go.jp/Resource/paraguay/espanol/office/others/c8h0vm0000ad5gke-att/info_02_01.pdf
- (2) Universidad Nacional de Asunción. 2020. Compendio gráfico de exportaciones agroalimentarias del Paraguay: 2019. https://issuu.com/ecorural.fca.una/docs/compendio_export_agroalim_2019
- (3) Aswath Damodaran. 2021. Current Data. https://pages.stern.nyu.edu/~adamodar/
- (4) Cinthia González et al. 2018. Rentabilidad de la caña de azúcar con manejo orgánico y convencional. https://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-34292018000300005
- (5) GEF. s.f. Soja en Paraguay. https://greencommoditiesparaguay.org/soja/
- (6) El País. 2017. Choque por los plaguicidas químicos. https://elpais.com/elpais/2017/03/07/planeta_futuro/1488898191_300379.html
- (7) Gustavo Pérez. 2018. Uso agrícola para el cultivo de semillas orgánicas de chía blanca y negra, teff y sésamo. https://www.mades.gov.py/wp-content/uploads/2018/10/7231_ACKERLAND_GUSTAVO.P.pdf
- (8) Gobierno del Paraguay. 2014. Plan Nacional de Desarrollo Paraguay 2030. https://www.stp.gov.py/pnd/wp-content/uploads/2014/12/pnd2030.pdf
- (9) Ministerio de Agricultura y Ganaderia. 2013. Marco estratégico agrario. https://faolex.fao.org/docs/pdf/par179001.pdf
- (10) SENAVE. 2014. Normativas vigentes de la Dirección de Calidad, Inocuidad y Agricultura Orgánica. http://web.senave.gov.py:8081/docs/web/Compendio-DICAO.pdf
- (11) Congreso de la nación paraguaya. 1973. Ley Nº 422 / FORESTAL. https://www.bacn.gov.py/leyes-paraguayas/2370/ley-n-422-forestal
- (12) Congreso de la nación paraguaya. 1994. Ley Nº 385 / SEMILLAS Y PROTECCION DE CULTIVARES. https://www.bacn.gov.py/leyes-paraguayas/2377/ley-n-385-semillas-y-proteccion-de-cultivares
- (13) Congreso de la nación paraguaya. 1993. Ley Nº 294 / EVALUACION DE IMPACTO AMBIENTAL. https://www.bacn.gov.py/leyes-paraguayas/2374/ley-n-294-evaluacion-de-impacto-ambiental
- (14) Agencia Financiera de Desarrollo. s.f. Acerca de la AFD. https://www.afd.gov.py/que-es-la-afd
- (15) Crédito Agrícola de Habilitación. s.f. Misión y Visión. https://www.cah.gov.py/mision-y-vision
- (16) Agencia de Información Paraguaya. 2021. Fortalecer a productores mediante programas y facilitar el acceso a créditos, desafíos del MAG para el 2020. https://www.ip.gov.py/ip/fortalecer-a-productores-mediante-programas-y-facilitar-el-acceso-a-creditos-desafios-del-mag-para-el-2021/