ASUNCION, Feb 11 (Reuters) - Paraguay's soybean harvest could fall by as much as 50% to some 5 million tons in what would be its lowest level in the last decade due to a drought affecting the region, Paraguay's Agriculture and Livestock minister, Santiago Bertoni, told Reuters on Friday.
Paraguay, the world's fourth-largest exporter of the oilseed, produced close to 10 million tons in the previous cycle. But yields in the 2021/2022 season fell in most crop areas to about 1 ton per hectare, far below the average of 2.8 tons per hectare.
Bertoni said they were forecasting a 50% reduction in production volumes from the previous season to around 5 million tons.
"The reduction is going to be very big. The entire sector is renegotiating contracts because there is no product," Bertoni said in a telephone interview.
The forecast drop in Paraguay comes as soybean output in Brazil, the world's largest producer and exporter of the oilseed, is also seen falling due to drought conditions.
"Based on the yields of what is being harvested to date, that is more or less what we are estimating ... the drought has severely affected us," Bertoni said.
A lack of rain in December and January affected the so-called early soybean harvest, which covers about 1 million hectares of the 3.7 million hectares harvested during the season.
"We pinned our hopes on seasonal soybeans, but they were also affected and yields are very low," said Bertoni.
The last time Paraguay produced less than 5 million tons of soybeans was in the 2011/2012 cycle, when volumes fell to just over 4 million tons, also due to a prolonged drought, according to data from the Paraguayan Chamber of Soybean Exporters.
Paraguay exports over half of the soybeans it produces and its economy depends heavily on shipments abroad of raw materials.
Bertoni estimated a reduction in foreign exchange income of between $1.5 billion and $2.0 billion this year due to the drop in soybean production.
Paraguay's government recently announced measures to help farmers https://www.reuters.com/world/americas/paraguay-announces-agriculture-relief-measures-amid-severe-drought-2022-01-05, such as debt refinancing, soft loans and tax relief.
Falling soybean output has prompted mills to consider importing the oilseed for the first time from neighboring countries Argentina, Brazil or Bolivia, which are reeling from the drought.
"Right now we are seeing that the national industry could have significant idle capacity, but it is a situation that will probably be seen in the second half of this year and we will see where we can get supply in the region. It is still somewhat premature," Bertoni said. (Reporting by Daniela Desantis in Asuncion Writing by Anthony Esposito Editing by Matthew Lewis)
