Our analysis considers each of the previously identified elements that contribute to the formation of the modern agricultural frontier: (1) underlying and proximate drivers; (2) spatial determinants and required conditions; and (3) individual actor characteristics.
Drivers of soybean expansion in the Paraguayan Chaco
Underlying and proximate drivers of soybean expansion in the Chaco
Initially, we considered all known underlying and proximate drivers of soybean expansion (supplementary online material section 1), and then systematically ruled out any that did not apply to soybean expansion dynamics in the Paraguayan Chaco. Over two-thirds of our interviewees stressed that limitations in infrastructure and changes in demand for soybeans did not play a major direct role in driving the current wave of soybean frontier expansion. This perspective was supported by the general downtrend in soybean prices between 2012 and 2017 (World Bank Group 2017), as well as low levels of investment in infrastructure in the last decade (Veit and Sarsfield 2017). Instead, respondents listed factors related to technological changes, policy changes, and favorable land price in driving soybean expansion, described in detail below.
All 25 interview respondents cited advancements in agricultural technology, specifically genetically modified seed varieties, the control of pathogens, insects, and weeds through chemical inputs in combination with no-till planting techniques as the major proximate driver contributing to soybean expansion in the Paraguayan Chaco. We found that of these technologies, the ubiquitous use of no-till planting on top of flattened cover crops as a moisture retention technique is considered by all interviewed respondents as having played the largest role in facilitating soybean expansion, by mitigating the impacts of drought and high heat (RCC 2020). No-till methods were first implemented on a large scale in the Paraguayan Chaco via replication of experiences with soybean production in the Salta and Chaco provinces in Argentina (Fehlenberg et al. 2017; Zoomers and Goldfarb 2013) (interviews 1, 3, 4—see supplementary online material). Complimentary to this change in technology in the region, but often cited as the technological factor that will unlock the region for further soybean expansion, is the development and use of drought-resistant genetically modified (GM) seed technologies and glyphosate application (USDA-FAS 2018). As of 2019, over 340 soybean varieties had been tested in the Paraguayan Chaco with the most success seen in seed maturity groups with longer maturation periods (Dueck 2018). These dynamics will continue to play a role as production methods and seed genetics improve and are further specialized to conditions present in the region.
Policies and governance
The 2004 zero-deforestation law (Zero Deforestation Law 2004) in the eastern region of the country spurred a new wave of investment in the Chaco, as it the only region in Paraguay where forest to pasture/cropland conversion remains legal. Seven of the interview respondents cited the implementation of this law as an underlying dynamic driving soybean expansion in the Paraguayan Chaco, in addition to the relatively few restrictions placed on agricultural producers operating in the region. In order to be compliant with federal environmental laws, rural properties in the Chaco need to maintain a legal reserve of natural forests totaling at least 25% (Forest Reserve Law 422/73, Decree regulation 18831/86 1973) of their property size, in addition to maintaining the “preservation and management of watersheds and wetlands” (National System of Wild Protected Areas of Paraguay Act (SINASIP) 1994), as well as the obligation to perform environmental impact studies. Additionally, few ownership restrictions for foreign land owners (except for a 50 km buffer from national borders), low tax rates, and poor enforcement of regulations by the federal government are further conditions that are favorable to agricultural expansion by both domestic and international actors operating in the region, including soybean producers (IUCN 2019; Redo et al. 2011; Veit and Sarsfield 2017).
In 2008, an average hectare of forestland in the Chaco was valued at roughly USD$40–50, rising to USD$250–300 in 2012 (Galeano 2012). Today, forested land can sell for USD$150–600 per hectare, and cleared pastureland can sell for USD$500–2000 per hectare (Veit and Sarsfield 2017). Despite these increases, Paraguayan land ranks among the lowest land valuations in Latin America, second only to Bolivia, attracting producers looking to expand their pasture/croplands as well as international actors looking to invest in land deals with an expected high return on investment (Veit and Sarsfield 2017). Seventeen of our respondents cited “consistently appreciating land prices” as being a major underlying driver of soybean frontier expansion. As more actors began to purchase land in the Chaco region, land prices increased, attracting domestic and increasingly foreign investors operating in cattle production, land speculation, and eventually soybean production from Argentina, Brazil, Uruguay, and further abroad (Veit and Sarsfield 2017).
Spatial determinants and required conditions for agricultural production
Our study identified three contributing determinants and conditions for soybean production: soil highly suitable for agricultural production, perceived increases in precipitation, and adequate levels of infrastructure (supplementary online material section 1).
Suitability for agricultural production
If producers can mitigate challenges attributed to water scarcity and can access zones with suitable soil types, the Paraguayan Chaco is biophysically apt to modern soybean production technology. This is supported by all interview respondents who indicated the high soil fertility in the region favors suitability for agricultural production. High soil fertility can reduce input costs for soybean production by reducing the need for fertilizer at a savings of roughly 30% compared to other regions in Paraguay, potentially offsetting significant transportation costs of bringing soybeans to market (interview 1, 5, 7—see supplementary online material).
Throughout our interviews, the majority of respondents cited increased levels of precipitation to be a potential factor driving soybean frontier expansion in the Chaco, as water scarcity is the greatest limiting factor in agricultural production in the region. Recent studies have suggested a potential increase in precipitation and extreme weather events in Northern Argentina, and several other surrounding regions (Barros et al. 2008; Ferrero and Villalba 2019). However, according to historical climate data based on the 2017 CRU Dataset (Harris et al. 2020), we did not find a significant variation in precipitation or temperature between the years 1980 and 2016 in various locations throughout the Paraguayan Chaco in the months surrounding soybean production and harvest which occur between November and April (supplementary online material section 3 a–b). To understand the discrepancy between our climate assessment and the reported increase in precipitation by many interviewees, we undertook an exhaustive literature review of studies focused on the Gran Chaco region and the entire La Plata Basin. Our review considered studies that claim overall increasing precipitation across the La Plata basin such as Grimm et al. (2016) that looks at overall precipitation trends in the region between 1970 and 2005, as well as studies from neighboring regions (Mato Grosso do Sul, Brazil) reporting stable precipitation patterns between 1954 and 2013 (Teodoro et al. 2016). Additionally, we examined studies focused on the relationship between land use, atmospheric moisture recycling, and precipitation patterns in the region (Keys et al. 2016), the impacts of climate change on El Niño and La Niña weather events in South America (Cai et al. 2015; Pezzoli and Ponte 2016), as well as studies pertaining to water resources specific to Paraguay (Coronel et al. 2015). Despite this line of inquiry, we did not find any empirical evidence specific to changing precipitation levels or temperatures and soybean expansion in the Paraguayan Chaco. This assessment is in line with dynamics observed in the Northern Argentine Dry Chaco region, whereby rainfall was ruled out to be a major determinant of cultivated land expansion (Gasparri et al. 2015).
These findings do not eliminate the possibility of localized increases in precipitation in recent years that are not covered by the available data. Nor does it eliminate the possibility that perceived increases in precipitation by producers may have occurred as a result of prevailing opinions in the region and/or the success of recently implemented moisture conserving production methods. Either of these outcomes could influence the decision-making and risk assessments of producers as to whether they engage in soybean production. However, similar to Gasparri et al. (2015) in the Argentine Chaco, we have ruled out recent increases to precipitation as a major determinant in soybean expansion in the Paraguayan Chaco.
The lack of reliable infrastructure in the Chaco region is a challenge for all actors engaged in economic activities in the region. To date, the trans-Chaco highway is the only non-urban paved road facilitating agricultural production and transportation in the region (Fig. 1). At present, harvested soybeans bound for export originating in the Paraguayan Chaco travel considerable distances to reach grain ports in Concepción (roughly 350km) and, more frequently, the Asuncion/Villeta area (roughly 450km), and can only be transported in dry conditions, as unpaved roads become impassible if wet. Despite these difficulties, current levels of accessibility and infrastructure have been sufficient to meet the minimum requirements of satisfying the required conditions for agricultural supply chains if goods are transported during dry periods, despite reported difficulties and lost or damaged harvests due to wet conditions (interview 1—see supplementary online material). Despite its current marginal role in driving soybean expansion dynamics, improvements in accessibility could become one of the most important drivers of frontier expansion in the region, as it is one of the most frequently cited drivers of both pastureland and cropland expansion in the greater Gran Chaco (Le Polain de Waroux et al. 2016; Piquer-Rodríguez et al. 2018; Volante et al. 2016). Increased accessibility could make soybean production viable in regions that are currently inaccessible, sparking a change in the underlying profitability of cropland production in the region through scaling and agglomeration effects (Le Polain de Waroux et al. 2018).
The decision parameters and behaviors of different actor types play a role in soybean expansion dynamics in the Paraguayan Chaco. This understudied element of agricultural frontier expansion dynamics is explained in detail below.
Access to information
Access and availability to information for decision-making is strongly linked to actor type in the Paraguayan Chaco. For instance, all interviewed large-scale soybean producers (supplementary online material section 4) have adopted technologies and production schemes from other soybean-producing regions due to personal experience or first-hand gathered information about best practices in those regions. The majority of interviewed medium to smaller sized producers expressed that they lack the resources to be able to gain access to this type of information due to the prohibitive cost of attending meetings or a lack of awareness that this type of information is being shared without outside assistance or the selective transfer of information by larger producers. Large-scale soybean producers are highly engaged in disseminating information and actively contribute to workshops and events organized by civil society and the governmentFootnote 2, in addition to personal networks, agricultural expos, and public and private social media groups. Large-scale actors can leverage their influence to control the flow of information between in-groups that share information, and out-groups that are not privy to information, through invitations to meetings and/or social media groups similar to observations described in (Le Polain de Waroux et al. 2018).
Komarek et al. (2020) outlines a large body of literature about how producers position themselves and make decisions based on intrinsic levels of risk tolerance and how this defines individual preferences. We analyzed actor preferences in the Paraguayan soybean frontier in the Chaco and concluded that producers’ level of risk tolerance varies greatly depending on their size, incentives, and identity, and affects the type of frontier expansion they engage in. The largest producers active in soybean production in the Paraguayan Chaco focus on producing soybeans for export, as a short to mid-term return on investment, and are active in direct forest clearing to soybean production (interview 1—see supplementary online material). The long-term focus of these producers is to develop forestland properties into cropland and pastures, increase their property values, and sell them as land prices appreciateFootnote 3, Footnote 4. Their risk preferences are, therefore, inherently less conservative than among small/medium scale producers looking to diversify their economic activities or supplement their cattle operations through soybean production, which is more likely to occur on previously cleared land due to the high costs of land transformation (Neufeld 2018). Therefore, how soybean expansion occurs in the Chaco is different between actor types based on risk tolerance and subsequent preferences. Preferences can also lead actors to respond to non-rent based incentives, acquiring land to demonstrate prestige or status, the building of in and out-groups, or maintaining a “pioneer identity” observed in the Turner frontier thesis (Foa et al. 2012; Turner 1920) all of which do not lend themselves to quantification (Turner 1920). If the utility from engaging in frontier expansion offsets the conventional von Thünen logic of rents decreasing with distance to markets, a small number of risk-taking producers may act as the early innovators needed to catalyze large-scale landscape transformation. Our interviews suggest that soybean frontier expansion in the Paraguayan Chaco is co-determined by the particular risk attitudes that dominate among pioneering large-scale producers in the region. As one large-scale producer stated “soybeans are coming to the Chaco . . . people used to think that I was crazy for thinking it could become a soybean production region, but now it’s me producing the soybeans” (interview 1—see supplementary online material).
Individual actors’ ability to influence their rent conditions in the future reflects their level of agency and is largely dependent on their ability to organize and lobby (Jepson 2006; Le Polain de Waroux et al. 2018). In the Paraguayan Chaco, examples of differential levels of agency between actors can range from lobbying the central government for investments in infrastructure, to building roads, and providing input to planned changes in regulations (ABC Color 2019c), to organizing aid during extreme weather events or natural disasters (ABC Color 2019b). Mennonite producers have achieved high levels of agency through the governance structures of their respective colonies and the resources they control and administer. They have built private roads, facilitated land deals, purchased state-of-the-art machinery, and installed private agricultural extension and research programs for their members based on high levels of the organization. Several colonies are currently participating in research and development programs to improve soybean genetics for improved drought tolerance in collaboration with the Paraguayan Grains and Oilseeds Traders Association (CAPECO), the US Department of Agriculture (USDA), and the University of Missouri (La Nación 2017). The large-scale soybean producers in the Chaco (supplementary online material section 4) also exhibit high levels of agency in shaping the Chaco soybean frontier by influencing policy, lobbying for increased infrastructure spending, private non-state sponsored road building (Veit and Sarsfield 2017), and shaping the flows of information and discourse related to development in the region by forming alliances with projects sponsored by international organizationsFootnote 5. These actors speak at events and independently organize soybean producers active in the Chaco at all scales through meetings, events, and social media groups.
Access to land and capital
The differences in resources between actors and their comparative advantages dictate their relative access to an agricultural frontier zone. In a non-state driven frontier region, differential access to capital, credit, land, technical expertise, and trade networks impact whether an actor can expand to a region that may be “inaccessible” to other producers due to a lack of available resources (Le Polain de Waroux et al. 2018). In the Paraguayan Chaco soybean frontier, different actor categories bring different levels of access due to their respective level of capitalization, cultural affiliation, level of education, or if they represent a larger company or producer. Two of the three largest companies (Moroti & Palmeiras S.A, Carlos Casado) represent international agricultural interests, and can expand to regions that would be inaccessible to smaller producers due to constraints in credit and capital required for forest to cropland conversion (interview 1—see supplementary online material). Actors affiliated with the Mennonite colonies are able to access land for soybean expansion that is not available to non-members due to private ownership based on membership to the colonies (interview 13—see supplementary online material). Access thus plays a key role in determining the extent to which soybean expansion can or cannot take place in the Paraguayan Chaco.
Potential for soybean expansion in the Paraguayan Chaco
As of 2019, we identified 36 different instances of soybean production occurring in the Paraguayan Chaco (Fig. 1). Due to data limitations, the novelty of soybean production in the region, and time constraints, we cannot determine if these observed production areas are an exhaustive list, nor could we field verify each location. However, the points included in the analysis were cross-referenced with other data sources/interviews when possible and represent the most comprehensive list of soybean production locations in the Paraguayan Chaco to date.
The agricultural suitability requirements for soybean production are highly dependent on the previous land use/land cover and biophysical characteristics of production areas such as soil type, precipitation, and temperature. The most static of these variables is soil type, as it is more consistent on a year-to-year basis and whose characteristics play the most significant role in determining the spatial extent of soybean production. The Paraguayan Chaco consists of 12 soil types, of which three make up the vast majority of the territory: Solonetz (34 at.8%), Regosols (27.6%), and Luvisols (20.4%). The majority present-day soybean production in the Paraguayan Chaco occurs in Regosols and Luvisols (86.1%), followed by Solonetz (11.1%) and Cambisols (2.7%) (supplementary online material section 5).
According to our field observations, soybean production in the Chaco has occurred, by in large, on previously cleared pastureland, except in the cases where forestland was transformed to soybean production as a part of large-scale land development (Passerieu 2018). A map of soybean presence according to historical land use can be found in supplementary online material section 6. A preliminary assessment of how much land is apt for soybean expansion based solely on soils and land use/cover consists of previously cleared pastureland subsisting of Luvisol and Regosol soil, which adds up to a total of 2.9 Mha across the Paraguayan Chaco (roughly the size of Belgium). This assessment does not take continued pasture use and cropland/pasture competition into account, nor does it include additional socio-environmental variables such as precipitation, temperature, distance to port, land price, and infrastructure. To establish a more detailed exploratory projection of soybean apt production regions in the Chaco that considers additional available data, we implemented the Maxent SDM model (supplementary online material section 9).
We estimate that roughly 742,000 hectares in the Chaco, roughly 3% of the territory, are high or very highly apt for soybean production (Fig. 2). If we project an average yield of 2.9 Tn/ha (similar to the Argentinean Chaco), this expansion has the potential to contribute an additional 2.15 Mtn more to Paraguay’s current soy production (9.8 Mtn), an increased output of roughly 22%. The department with the largest projected soybean expansion potential is Boquerón, where the majority of “high and very high soybean occurrence probability,” occur. We identified an additional 940,000 hectares, roughly 4% of the territory, as moderately apt for soybean expansion, concentrated in Central and South Western Boquerón, with additional presence in the Agua Dulce region of Alto Paraguay.
According to our model, the variable with the highest explanatory power when used in isolation is land cover (labeled “land use” in supplementary online material section 11). The land cover variable also changes the model outcome the most when it is omitted, suggesting that it contains the highest level of non-redundant information in the available set of covariates. The relative importance of the land cover variable is supported by information gathered by our field visits, as the vast majority of observed soybean production recorded in our study occurs on previously cleared pasture. The next two significant variables are soil type and the maximum temperature in the warmest month (Table 1). These findings were also supported by our field visits and the preliminary suitability assessment based on soil types as they play an important role in where soybean production has been observed and reflects the consensus of all interviewed stakeholders about the difficulty of agricultural production in extreme heat and drought conditions. We note that this projection uses limited data on a highly dynamic and nascent agricultural frontier and is intended to serve as an exploratory assessment of the potential for large-scale soybean production in the Paraguayan Chaco.