Brazil’s recent diplomatic tensions with Paraguay have done little to dampen business ties. Brazilian agribusiness companies are stepping up investments in the neighboring country, attracted by lower operating costs, cheaper financing, lighter taxes and a regulatory environment viewed as more favorable to long-term investment.
The latest expansion differs from earlier migration waves led by farmers. Today, the movement is increasingly driven by Brazilian land companies, agricultural input suppliers, biologicals producers and meat processors seeking to expand across the border.
“There are factors that attract investors, such as simpler bureaucracy and taxation, as well as long-term investment security under a pro-business government,” said Eduardo Marrey, commercial director at BrasilAgro, a farmland owner and farming company that has operated in Paraguay since 2012.
Marcos Petean, chief executive of Brazilian biologicals company Gênica, said concerns surrounding occasional tensions along the Brazil-Paraguay border do not reflect the country’s business environment.
“It’s a competitive agricultural sector, with good logistics and soil and climate conditions similar to Paraná in the country’s most developed farming regions. There’s also strong cultural affinity — we speak Portuguese with both farmers and distributors,” Petean said.
He said credit risk is comparable to Brazil’s but creditor protections are stronger. Agricultural input purchases are commonly backed by a pagaré, a promissory-note-like credit instrument that can be enforced against a debtor’s assets.
“If someone with substantial assets signs a pagaré, it carries significant value. If payment isn’t made, creditors can enforce it against virtually any asset, from cash to farmland,” another industry source said.
Tax policy is another attraction. According to a study by Brazilian farmland startup Reland, Paraguay levies a 10% value-added tax and taxes gains on real estate transfers at 1.5%.
Corporate income tax is 15%, including for non-residents. The country’s Maquila Law exempts import duties for export-oriented manufacturers and has been used by companies operating on both sides of the border, including Inpasa, which imports corn-based thermal oil from Brazil to produce biodiesel in Paraguay for export.
Labor costs are estimated to be 30% to 40% lower than in Brazil, according to industry specialists. Companies also cite Mercosur trade opportunities, benchmark interest rates of 5.5% compared with 14.25% in Brazil, and significantly lower electricity prices.
Lower production costs and cheaper credit translate into stronger farm profitability, encouraging producers to adopt new technologies more rapidly, said André Kraide Monteiro, chief executive of Brazilian biological inputs company Agrivalle, which sold a stake to Agrihold in March.
“Farmers have a greater appetite for technology. I believe adoption of biological inputs will be faster than it was in Brazil because we’ve seen the same pattern with previous innovations,” he said.
Reland also argues that Brazilian farmland has already undergone a substantial repricing. The company estimates land prices in Brazil rose 113% between 2019 and 2024, while Paraguay has yet to experience a comparable appreciation cycle.
“Our investment thesis is geographic diversification, exposure to different cost structures and greater flexibility in asset structuring,” Chief Executive Júlio Mühlbauer said.
A 150-Year Agricultural Migration
Brazilian migration to Paraguay dates back more than 150 years and has played a decisive role in developing the country’s soybean and livestock industries.
Herib Caballero Campos, a historian at the Universidad Nacional de Pilar, said Paraguay’s economy remained largely extractive from the colonial era through the early 20th century, centered on timber and crops such as yerba mate.
He identifies four major waves of Brazilian migration, all closely tied to agriculture.
The first followed the Paraguayan War (1864-1870), when Brazilians settled areas north of the Apa River, now part of Brazil’s Mato Grosso do Sul state.
A second wave arrived in the 1920s alongside early cotton cultivation. During the 1950s and 1960s, Paraguay launched programs to diversify agricultural production, including a National Wheat Plan.
“During that period, Alfredo Stroessner’s dictatorship began selling land owned by La Industrial Paraguaya to promote settlement in Alto Paraná. Many farmers from Rio Grande do Sul and Paraná moved there in search of cheaper land,” Campos said.
Most continued producing soybeans, the crop they already knew.
“That marked the beginning of a much more significant migration and the development of the entire border region,” he said. “Brazilians brought a more modern, mechanized agricultural model with greater capital, resulting in higher productivity.”
Another expansion followed during the 1990s and 2000s as soybean production and cattle ranching grew rapidly. Brazilian meatpackers including JBS and Minerva expanded into Paraguay, helping increase both production volumes and export revenues.
Soybeans, planted on 3.6 million hectares (8.9 million acres), and cattle, with a herd of 12.8 million head, remain the country’s leading agricultural industries. Corn production has also expanded, while investment in pork production continues to accelerate, Campos said.
He noted that Paraguay has one of the world’s most unequal land ownership structures, with roughly 8% of landowners controlling more than 90% of productive farmland. As a result, land lease arrangements are widespread and many farmers do not own the land they cultivate.
Brazilians account for 33.2% of all immigrants living in Paraguay, according to the country’s National Statistics Institute. They also led residency approvals in 2025, with 20,852 permits granted, according to Paraguay’s National Migration Directorate.
Paraguay’s 2022 census identified 15,879 Brazilian farmers, although researchers estimate they may account for as much as one-quarter of all agricultural producers in the country.
Campos described relations between Brazilians and Paraguayans as “relatively harmonious,” despite occasional disputes, particularly over land claimed by Indigenous communities.
“At festivals in cities such as Naranjal and Santa Rita, you’ll often find Brazilian country music performers rather than Paraguayan artists. The local press sometimes complains about that,” he said.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
