By Daniela Desantis

ASUNCION (Reuters – Paraguay’s soybean processing industry will be out of beans in the middle of next year because of drought, according to the trade sector body of the country. It also said it was currently discussing the possibility of importing beans for the very first time.

This landlocked South American nation, fourth in soybean exports, faces its worst harvest in 10 years. The drop in soy production could result in half of the soy produced compared to the last season.

Paraguayan Chamber of Oilseed and Cereal Processors, Cappro, told Reuters that drought may have a worse impact than the previous campaign. It estimates that there will be a 60% drop in soy production compared to 2010.

The chamber responded to Reuters’ questions in an exclusive reply, saying that this figure may rise depending on the rainfall. It added that there could also be idle crushing capacities of 60%-70% during the last half 2022.

This situation means that it’s likely that companies won’t have the ability to continue soybean processing in the second part of the year.

Paraguay has been hit by a drought since late last year, which has badly damaged crop yields and caused navigation problems in the key Paraguay-Paraná waterway, pushing up costs for transporting the processed grains down river for export.

Argentina, the largest exporter of processed soy in the world, is also at risk from drought. With the possibility of low rainfall, they may be unable to harvest their corn and soy crops.

The chamber, which represents big commodity companies such as Archer-Daniels-Midland Co, Bunge (NYSE:) Ltd. Cargill, Louis Dreyfus said that they had asked the National Economic Team of government to grant a tax exemption for soybean crushing imports. It is economically uneconomical to import raw beans under the current tax system.

The chamber stated that “with this… it would possible to look at regional alternatives, in order to cover the demand which cannot be met locally.” Paraguay would import raw soybeans for the first time if the proposal is approved.

Paraguay’s soybean industrial complex produced 2.8 million tonnes oil seeds last year. It was the lowest production since 2013, with 500,000 tonnes more than the 2020 Cappro data.

Cappro stated that Paraguay’s oilseed crushing industry was experiencing one of the most challenging years in its history, especially since 2013 when capacity increased significantly from 1.5million tonnes to 4.5million tonnes.

It stated that “We are living through one of the most difficult years in our history.”