Paraguay's agricultural sector plays the major role in the economy, contributing 27% of nation’s GDP in 2006 as well as accounting for virtually all export earnings. Cotton, which is especially suitable for the climate of South America, has been one of the oldest crops grown for export through the history of Paraguay.
Benefits
* In 1970, Paraguay was producing 37,000 tons of raw cotton, and then saw a period of extremely rapid growth of the industry. In 1985, Paraguayan farmers were producing about 159.000 tons.
* Cotton exports earned approximately $ 100 million in 1987, with most of the raw cotton used to go to Britain, France, Germany, Japan and Uruguay.
* Due to low technological level, the raw cotton was exported generally until the mid-1990s, at which point a group of Italian-Paraguayan group developed a US $ 10 million computerized cotton spinning plant. Situated on the outskirts of the capital, Asuncion, the plant provides the means to spin cotton in the country, adding a 140% profit to its export value.
The problems caused by the cotton industry
Agriculture is the largest source of employment of Paraguay, boasting 45% of the workforce. With this many people depend on agriculture industry, if not kept in check, foreign ownership and technological advances can be harmful to society, leaving people jobless and homeless.
* In late 1980’s, the production of the central region of cotton was becoming largely overshadowed by the large foreign capital commercial production in the region of the eastern border. In addition to being falling behind the production, the central region was also behind technologically, selling raw cotton. The cotton industry began to suffer from large fluctuations in prices, leaving the rural farmers unable to depend on their expected revenues.
* While progress in the mid-1990 the computerized cotton yarn plant was needed to stay spirited, the more the cotton business expands and the more computerized farming becomes, in turn it will abscond more and more rural cotton farmers out of work
Issues facing the cotton industry
* A bad drought can be devastating to the cotton industry. Paraguay was producing almost 159. 000 tons of cotton in year 1985, a year later that number dropped to only 84,000 tons during the drought of 1986.
* In 2006, Paraguayan exports had been forecast at 40 000 tonnes, the lowest in 30 years as a result of a two-year drought.
* In spite of the production of cotton, the cotton industry experiences wide fluctuations in prices, more so than other agricultural fields, which can have a major impact on the economy.
