Panel III: PARAGUAY AS FOOD PRODUCTION PLATFORM

JUAN CARLOS BARUJA

Minister of Agriculture & Livestock – PARAGUAY

Berlin’s International Green Week

January 20th 2017

Minister of Agriculture & LivestockParaguay

¿Where is PARAGUAY?

Paraguay, in the center of South America, landlocked country.

Producer and exporter of agricultural production and

electric power

Surface Area: 406.752 km2

Population: 6.568.000�50%=15-49 year-old

�37% <15 years old

MILLENIUM ASSETS: FOOD+WATER+ENERGY

Eastern Region (38%)� ≈ Size United Kingdom

� 97% population� Agriculture (99%) + Livestock

(55%)

Western Regionor CHACO (62%)

� ≈ Size New Zealand

� < 3% population� Livestock (45%):

(Natural Beef)

PARAGUAY ON THE WORLD

4ºWORLD EXPORTER OF

CASSAVA STARCH

1ºRENEWABLE

ENERGY

4ºMOST EXPORTER

OF SOY OIL

4ºEXPORTER OF

SOY

3ºBARGE FLEET

3ºPRODUCTOR

AND EXPORTER

OF YERBA MATE

2ºPRODUCTOR OF

STEVIA

10ºMOST EXPORTER

OF WHEAST

6ºMOST

EXPORTER OF

SOY

6ºMOST EXPORTER

OF CORN

5ºMOST EXPORTER

OF BEEF

5ºMOST WORLD

EXPORTER OF SOY

EXPELLER

PARAGUAY Produces PARAGUAY Produces FoodFood forfor100 100 millionmillion PeoplePeople in in thethe WorldWorld

Paraguay GDP Share by sectors

Agriculture 28 %

Manufacturing 13 %

Construction 4%

Commerce & Services 56%

Agriculture Share in Total Country Exports

2010 2011 2012 2013 2014 2015

63,6%63,6% 63,8%63,8% 60,9%60,9% 69,1%69,1% 69,5%69,5% 58,7%58,7%

STRATEGIC OBJECTIVES NATIONAL DEVELOPMENT PLAN PARAGUAY 2030

Poverty Reduction & Social Development

Promote Socially Inclusive Economy

Positioning Paraguay in the World

�� EconomicallyEconomically FEASIBLEFEASIBLE�� SociallySocially INCLUSIVEINCLUSIVE�� EnviromentallyEnviromentally BALANCEDBALANCED

SUSTAINABLE PARAGUAYAN AGRICULTURE

Soy Complex

Control of

erosion

Wheat

Sunflower

CanolaRotación de

Cultivo

Green manures to

protect the soil

Floor mail

aplication

Soy Corn

Direct seeding

Control of the erosion

Soy Crop Wheat

Crop rotation

Soy Crop Wheat

Sunflower Canola

Crops Total Production

Paraguay 1995-2016

CropCrop19951995

(000, ton)(000, ton)

20162016

(000, ton)(000, ton)

GrowthGrowth

(x) (x)

SoySoy 2.7712.771 9.1109.110 3x3xSoySoy 2.7712.771 9.1109.110 3x3x

CornCorn 873873 5.4615.461 6,3x6,3x

WheatWheat 401401 1.3141.314 3,3x3,3x

CropCrop19951995

(000,(000, HaHa))

20162016

(000, Ha)(000, Ha)

GrowthGrowth

(x) (x)

Planting AreaParaguay 1995-2016

SoySoy 1.0501.050 3.2643.264 3,1x3,1x

CornCorn 335335 876876 2,6x2,6x

WheatWheat 201201 635635 3,1x3,1x

PARAGUAYAN BEEF

DELICIOUSLY NATURAL

¡A PLEASURE ON YOUR TABLE!

� National Cattle Herd grew by 49%

� Annual Slaughtering increased 4x

Beef Industry in Paraguay from2000 – 2015:

� Annual Slaughtering increased 4x

� Exports (TON/CWE) incremented 6x

� Exports Value (US$) beef and by products

raised 21x

Sour: MAG, 2016

Top 10 World Beef Exporters(‘000 TON CWE) 2016

1000

1200

1400

1600

0

200

400

600

800

1000

(Source: USDA, 2016)

6

Beef Export Growth in the MERCOSUR Years 2003 vs 2014 (US$ Millions)

5570

2014

2003

57

1547

379 577

1244 14051049

PARAGUAY BRASIL URUGUAY ARGENTINA

21,2xGROWTH

TIMES (x) 3,6x 3,7x 1,8x

2014

(Source: Senacsa, 2014, IPCVA 2014, INAC 2014; MAPA, 2014)

Agriculture Total Exports (US$) vs Poverty Index (%) –PARAGUAY 2006-2015

43,7 41,237,9

35,1 34,732,4 30

40

50

5.000.000.000

6.000.000.000

7.000.000.000

34,732,4

26,923,8 22,6 20,2

0

10

20

30

0

1.000.000.000

2.000.000.000

3.000.000.000

4.000.000.000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Exportacion Py Indice de la Pobreza

Source: BCP, STP, 2016

Paraguay Exportation Poverty Index

� PERSPECTIVES

PARAGUAY VISION:

National Development Plan Paraguay 2030December 2014

PARAGUAY VISION:

“GLOBAL

FOOD PRODUCTION PLATFORM ””

In a In a SustainableSustainable and and CompetitiveCompetitive WayWayCompetitiveCompetitive WayWay

GeneratingGenerating Social and Social and EconomicEconomic DevelopmentDevelopment forfor

thethe COUNTRYCOUNTRY

TRIBUTATE REGIME

++ ++

REGIME 10/10/10

0

%

0

Import tariff for capital

(Machines)

(IVA) Capital goods

LAW 60/90 OTHER

INCENTIVES

• MAQUILA LAW

• LAW OF

CERTIFICATE OF

ORIGIN

IMPUESTOS PY AR UR BR

Corporateincome tax(*)

≤10%

35%

25% 34%

Source: Ministerio de Hacienda (www.hacienda.gov.py

++ ++

(*) Obs: si se distribuye internacionalmente

puede ser hasta 27.5%

0

%

0

%

0

%

(IVA) Capital goods

(In and out of the country país)

DEBT: Tax applie to remittances

and capital payments, interest

and commissions

(For inversions> a USD 5MM)

EARNING: Divident tax and

investment income

(For inversions > a USD 5 MM by

10 años)

• LAW OF

INVESTMENT

GUARRANTY

• LAW APP / 5074

• LAW OF FISCAL

RESPONSABILITY

• LAW OF

INDUSTRIAL

PARKS

Personal income tax 10% 35

%25%

27,5%

Value –added tax(IVA)

≤10%

21%

23% 25%

BESIDES OF SGP+ / MAIN COMPETITIVES ADVANTAGES

OF PARAGUAY FOR THE COMPANIES

PRICE OF ENERGY – INDUSTRIAL SECTORAño 2014 (USD x MWH SIN IMPUESTOS)

124

308

6362

-50%-80%-2%

% Difference of Paraguay

LABOR COST 2014 (USD x HORA) – SOCIAL COST

12,94,2

21,9

6,0

-81%-30%-67%

Source: ANDE, Eurostat, CIER, U.S. Bureau of Labor Statistics, KPMG

statistics, Oanda y análisis Arthur D. Little.

VALUE – ADDED TAX(IVA) 2014

21,4%25%21%

10%

-53%-60%-52%

26,3%34%35%

10%

-62%-71 %-71%

INCOME TAX

2014

AGROINDUSTRIAL POWER TO FEED THE WORLD

Paraguay has potential to triple its

agricultural frontier with:

INCORPORATION INCORPORATION

IRRIGATION

SYSTEMS

IRRIGATION

SYSTEMSINCORPORATION

OF TECHNOLOGY

INCORPORATION

OF TECHNOLOGY

SYSTEMSSYSTEMS

TERRITORIAL

PLANNING

TERRITORIAL

PLANNING

Dr. MARCOS MEDINA-BRITOS

vganaderia@mag.gov.py

AGUYJE!AGUYJE!

GRACIAS!GRACIAS!

THANKSTHANKS

INTRODUCCION

THANKSTHANKS

DANKE!DANKE!