South America’s Best Kept Agricultural Secret

guerra-del-chaco

map of the Chaco region

If you walk into the lobby of the Ibis hotel in Asuncion, Paraguay you will likely see eager faces pouring over large maps of a vast region of northwestern Paraguay called “El Chaco”. Wealthy land prospectors from all over the world (mostly Brazil, Uruguay, and Western Europe) consult men in panama hats as they consider buying their own tranche of South America. With land prices as low as a few hundred dollars per hectare in some places, the Chaco is considered by many to be one of the last agricultural frontiers. With Brazilian rain forest on its northeast, Bolivian high country to its west, and more developed agricultural land in Argentina and Paraguay to the south, the Chaco lies in the heart of South America. Amazingly, few people in the United States have ever heard about it.

The Chaco has a hot, harsh climate that produces temperatures as high as 120 ⁰F with little to no rain for six months out of the year. Only a third of the land in the Chaco has ground water with salinity levels low enough to irrigate or provide to cattle. With vegetation exhibiting four inch long thorns, and the omnipresent threat of yellow fever and malaria (during the wet season), it is no wonder that many of the land owners in this area have never even stepped foot on their properties. A simple fly over in a small plane is all that’s required for many people who buy in the Chaco. They see the area’s potential and know that land prices will continue to rise.

For people looking to add value to their land, currently, the main industry is cattle. They breed Brahman cattle from India because they are better suited to the climate. In areas with no ground water they build large water catchment areas called tajamares to capture rainfall in the wet season. Land owners in the Chaco with good ground water and sandy loam are looking beyond cattle to a more lucrative future. Aside from lacking infrastructure, their land is comparable to the major soy producing areas of southeastern Paraguay where land prices are an order of magnitude higher. Many believe that roads and other infrastructure in the Chaco will improve enough in the next 10 or 15 years to open up these budding agricultural areas. There have already been trials of soy and eucalyptus to test performance of these lucrative crops.

ParaguayChaco_Cattleranch3_PdeHayes

Cattle Grazing in the Chaco

Some landowners, without adequate ground water and favorable soil, are looking to see if they too have options beyond cattle. Terviva’s tree, Pongamia pinnata, is native to hot, tropical and subtropical areas of the globe that share many characteristics with the Chaco including monsoonal rainfall and extended dry seasons. Terviva is currently working with a Paraguay-based customer, Investancia, to establish a test plantation of pongamia this November. Pongamia plantations in the Chaco will fulfill Paraguayan domestic biodiesel needs, and the excess will be sold to nearby lucrative markets in Brazil, Chile, and Argentina. Unlike palm, pongamia can be sustainably grown on marginal land because it requires few fertilizers and little water. Given that it is a drought tolerant tree, it will be hardy in this hot and unforgiving environment. As a perennial tree crop, it requires much less infrastructure- which is severely lacking in the Chaco. Terviva is excited to be a part of the development of this exciting new agricultural region.

Adam Hanbury-Brown is a Research Associate for Terviva

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