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. 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. These figures indicated the great agricultural potential that remained in Paraguay in the late 1980s. One of the most important 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 War of the Triple Alliance. 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.
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