A South American Soybean Scandal

A sex scandal got Bill Clinton impeached. But, in Paraguay, it may be soybeans that got former Paraguayan President Fernando Lugo impeached and booted from office on June 22^nd.

One observer went so far as to say "Fernando Lugo is the latest victim of Paraguay's "soy war."

After all, bean exports have become very important to tiny, landlocked Paraguay, located southwest of Brazil. They ship 4.6 million tonnes overseas, which makes them the world's fourth-largest exporter—right after the USA, Brazil and Argentina. And it means soybean exports account for 25% of all Paraguayan exports, according to Rabobank, an investment bank.

One of the reasons Paraguay got so big on soybeans is that, back in the 1960s, the country's then-dictator, Alfredo Stroessner, invited Brazilians to buy farms in Paraguay and produce crops. Stroessner admired the industriousness of the nearby Brazilians from states like Rio Grande do Sul and Paraná—Brazilian states whose natives went on to open up farther-away hplaces like Mato Grosso decades later. As a result, Paraguay's largest soybean producer is very likely the Brazilian Tranquilo Fávero, with more than 110,000 acres in that country.

But the welcome mat was seen to have been pulled out from under the Brazilian producers in Paraguay after ex-bishop Fernando Lugo was elected president, in what was likely the first exchange of power from one Paraguayan party to another that was not accompanied by bloodshed. Although presidential power was peacefully handed over to leftist Lugo, congressional power remained conservative. 

Landless protesters this year began gathering around the properties of the Brazilian immigrants and their descendants, blocking roads and threatening to forcibly squat on the lands. They claimed the land sales to Brazilians were illegal, and the land should be confiscated and distributed to them. And the Lugo administration was seen as not doing much, if anything, about it—and probably being complicit.

Lugo's impeachment process took 48 hours, from start to finish, and he was bounced from office. The process took place about a week after 17 deaths occurred on lands near the Brazilian border from which police were removing squatters. Lugo's best political friends, Brazilian President Dilma Rousseff and Argentine President Cristina Fernández—both ardent leftists—have not only failed to recognized the new Paraguayan government, but have been instrumental in getting Paraguay suspended from the Mercosur trade bloc.

So the government has turned to the Brazilian farmers to try to get them to intercede with the administration in Brasília (Brazil's capital). And while Ms. Rousseff hasn't shown signs of sympathy so far, Brazil's bicameral legislative Ag caucus has welcomed the move to protect Brazilians farming in Paraguay.

So who says soybeans aren't sexy?