The landlocked South American nation of Paraguay is sending more beef to the US, but it hasn’t been allocated an export quota like the Trump administration set for Argentina, said Paraguay’s President Santiago Peña.
“The US with the prices currently, they are demanding more and more, and Paraguay is a reliable partner,” he explained. Paraguay’s growing economy and agricultural sector are attracting more investors.
The U.S. sells more to Paraguay than Paraguay sells to America — Paraguay buys a lot of its machinery and agricultural equipment from the U.S. — but Paraguay ships growing amounts of beef, sugar, and wood to the U.S.
Paraguay is a rather corrupt country, but its economy is growing, and it is a fairly good place to invest and do business, because it has low taxes, low inflation, and less government red tape than neighboring countries. It also exports a lot of hydropower from its three major hydroelectric dams, such as the world’s third-largest hydroelectric dam, the Itaipu dam .
Two of Brazil’s neighbors — Brazil and Bolivia — have horrifyingly complicated tax codes and much higher taxes than Paraguay. Paraguay’s other neighbor, Argentina, also has higher taxes. Argentina has recently embarked on economic reforms, and has recently eliminated a lot of government red tape, but still has an unusually large amount of government red tape, left behind by prior Argentine governments that made Argentina an unusually hostile place to do business. Argentina also used to impose heavy taxes on beef exports.
By exporting beef to the U.S., Paraguay and Argentina are filling a gap created by a shrinking U.S. cattle industry. America’s total cattle and calf herd has dropped to its smallest size in 75 years, down to around 86.2 million down from roughly 94.7 million in 2019.
- Severe Drought: Years of dry weather across major ranching regions like the West and the Plains have dried up water sources and destroyed pasture grasses.
- High Operational Costs: Expenses for diesel fuel, fertilizer, equipment parts, and feed have skyrocketed, making it very expensive to raise cattle.
- Selling Instead of Rebuilding: Because running a farm is so costly and risky, many ranchers have sold off their animals rather than keeping them to grow the herd.
- Industry Challenges: An aging population of farmers, lack of successors, and urban sprawl pushing land sales to developers have permanently reduced workable ranch land.
To help lower soaring costs for consumers—such as ground beef reaching around $6.90 per pound—the federal government has moved to increase imports. Plans include waiving tariffs on large amounts of imported foreign beef. However, industry groups say that foreign imports will not fix the root problem and may hurt domestic ranchers trying to recover. Because it takes at least two years to raise a cow for slaughter, supply relief is expected to take a long time.
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