Paraguay’s destructive soy boom

Fernando Lugo is the latest victim of Paraguay’s “soy war.” Elected president in 2008 as a “champion of the poor,” Lugo was impeached late last month, plunging this poorest of South American countries into uncertainty.

Lugo’s election on a promise to redistribute land and carry out agrarian reform was popular but ultimately unachievable because of the interests ranged against him. Earlier in June, 11 campesinos and 6 police officers were killed during an operation to evict squatters from a huge farm used by a large-scale land owner and opponent of Lugo. Using this as a pretense, the Senate impeached Lugo a week later.

But it’s the rise of the humble soy plant — and the oceans of land upon which it grows in Paraguay — that links Lugo’s ouster in a historical struggle between the country’s powerful landed elite and its poverty-stricken farmers, on the one hand, and a world that has no apparent limit to its appetite for soy-fed animal meat and biofuels, on the other.

Paraguay is not the first country to lose a government over land disputes. It will not be the last. After decades of cronyism and corruption, 77 percent of Paraguay’s arable land is owned by just 2 percent of the population. Globally in the past 10 years, deals have been struck for 203 million hectares of land — nearly six times the size of Germany — at a pace and scale that is outstripping the ability of governance structures to respond. The cracks, as in Paraguay, are never far from the surface.

Demand for soy is surging

Paraguay is now the world’s fourth-largest exporter of soy and demand is surging, driven primarily by China and Europe for cattle feed and biofuels. Paraguay’s agricultural landscape has altered dramatically on the back of this boom. Since 1996, more than 1.2 million hectares of forest have been cut down to grow soy rather than food and other crops. Brazilian settlers — the brasiguayos — have set up large-scale soy farms, provoking a prolonged conflict over what locals say is “earth robbery.” Over the last 20 years 100,000 small-scale local farmers have migrated to city slums or to other countries or have become landless. Each year in Paraguay 9,000 rural families are evicted by soy production and nearly half a million hectares of land are turned into soy fields.

Ironically, in a country where 40 percent of the population still lives in poverty and 11 percent are undernourished, Paraguay’s macroeconomy is booming. Its G.D.P. grew by 15 percent in 2010 — the second-fastest-growing economy in the world — on the back of soy exports worth $1.6 billion.

The Paraguay soy boom — made in China and Europe and grown upon the lands of the political elite — is controlled by the boardrooms of Big Business. As much as 70 percent of Paraguay’s soy is exported each year and of that the multinational grain giants Cargill, ADM and Bunge account for about 70 percent.

In 2004, the agribusiness Syngenta caused indignation by publishing an advertisement of a map that shaded a large area of Argentina, Brazil, Bolivia, Paraguay and Uruguay and called it the “United Soy Republic.”

But Paraguay has been unable to add significant value to its soy exports: In 2010, 5.7 million tons of its total harvest were exported as raw bean while only 1.5 million tons were processed. Other actors seem to be gaining more from this part of the United Soy Republic than ordinary Paraguayans are.

Poor people suffer most

There is ample cause for concern about law and order and the democratic process in Paraguay. In the event of any conflict, it is always the poor who suffer most. The international community needs to give more support to the people of Paraguay in order to build a more fair and inclusive country. They must give greater focus to rural development and sustainable food production, and to more equitable land rights, so that the poorest farmers are better protected from the global demand for land.

The IMF believes that Paraguay’s economy will grow next year to the tune of 8.5 percent — a fantastic prospect but only if the benefits of this can be fairly shared. More widely than that, corporate and political leaders who have helped to spur Paraguay’s soy boom need to look hard at its sustainability and how fairly it is returning benefits to ordinary Paraguayans.

More than half of the soy grown in Paraguay is exported to Argentina, and much of this is turned into diesel either in Argentina or in Europe to fuel Europe’s cars. In a world where a billion people go to bed hungry every night, policies that convert arable land from growing food to fuel are surely wrong-headed, and are only likely to increase competition and conflict over a scarce natural resource.

Originally published by the NYTimes, 2 July 2012.

Related links

Oxfam's work in Paraguay

On the GROW Blog: Can we live inside the doughnut? Why the world needs planetary and social boundaries for sustainable development

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