Declining farm productivity resulting from escalating soil erosion and soil degradation in conventional cultivation cropping systems has now reached catastrophic proportions. Farmers in the face of declining incomes and unsustainable farming systems inevitably have to abandon their farms. In response to this phenomenon sustainable no-till systems have been developing rapidly in South America, as indeed in other parts of the world (Derpsch, 1998b). Farmers have been quick to reap the advantages of no-till cropping that has proven to be not only profitable to them but also a cost-effective method of soil conservation. However, the areas where no-till has rapidly expanded have been almost exclusively on medium and large mechanised farms. No-till is yet to reach small farmers, not only in Paraguay, but also in other parts of the world (Wall, 1998).

The area of no-till in Paraguay on mechanised farms has been increasing rapidly since it was first introduced in 1990. In 1997, of the total area cultivated mechanically, some 939,650 ha, no-till was used on some 480,000 ha (51% of the total cultivated area). However, the cost of soil erosion is still not widely known nor are the substantial benefits of no-till appreciated. According to Derpsch (1998a), in 1997 Paraguay still lost through conventional cultivation on medium to large-sized mechanised farms almost 10.6 million tonnes of soil while in the areas of no-till only some 254,000 t of soil were eroded. The cost of the nutrients lost in the conventionally cultivated area of almost 460,000 ha in 1997 has been estimated at US$424 million (Derpsch, 1998a). At the same time medium and large farmers who have adopted no-till practices have almost completely eliminated soil nutrient losses providing a net saving in lost nutrients of US$433 million.

Besides this saving in lost nutrients which farmers don’t directly perceive, incomes from higher crop yields are being obtained and concomitantly reduced fertiliser, herbicide and fuel inputs have significantly reduced crop production costs (Sorrenson, 1997a). The total value of these reduced costs on no-tilled land of 480,000 ha in 1997 has been estimated at US$84 million (Derpsch, 1998a). Therefore the costs of soil erosion in 1997 plus the savings being realised from no-till in the same year totalled a massive US$941 million.

These estimates highlight the high costs of soil erosion still being incurred and the extent of the economic benefits no-till has already provided in Paraguay. If the rate of adoption of no-till on mechanically cultivated areas can be further raised, and no-till can be made available to small farmers, the additional economic gains that Paraguay could still realise are enormous. The Government of Paraguay should therefore seriously consider allocating more resources to realise these potential economic gains. The approach will also bring important environmental gains through reduced water and air pollution. Other social benefits include significantly reducing rural and urban poverty through increasing agricultural production and farm incomes and reducing the exodus of small farm families to the cities.

The economics of no-till and crop rotation systems on mechanised farms compared to conventional cultivation systems where first evaluated in detail in Brazil by Sorrenson and Montoya (1984). At that time, over six years of research and development into no-tillage and crop rotations by GTZ and IAPAR had been completed and a small number of farmers were beginning to introduce no-till on their farms. The results of this study indicated that there were substantial benefits to farmers and to society at large when farmers replaced conventional cultivation systems with no-tillage crop rotation systems. The rest is history. No-till and crop rotations including green manure crops have spread rapidly throughout Brazil.

MAG-GTZ initiated work on no-till and crop rotation systems on mechanised farms in Paraguay in 1993. The economics of no-till and crop rotations compared to conventional cultivation systems on medium and large mechanised farms in Paraguay were studied in detail by Sorrenson et al (1997a). This study showed that the adoption of no-till was highly profitable provided farmers changed their cropping systems by introducing crop rotations and successfully mastered the technique of no-tillage. The most important benefits arising from the introduction of no-till were:

1. increased cropping intensities possible under no-tillage compared to conventional cultivation (normally up from 2 crops per year to 3.5);

2. increased yields (from 5%-20% depending on the crop and soil type/climate);

3. reduced costs per crop due to savings in fertiliser (up to 50%), herbicide (up to 30%) reduced tractor hours and labour requirements (Sorrenson et al 1997b).

The MAG-GTZ project entered a second three-year phase in 1997. The primary focus of the second phase is to develop cost-effective soil conservation technologies for small farming systems in five pilot areas in Paraguay (San Pedro, Canindeyu, Caaguazu, Alto Parana and Itapua).

It has been estimated that there are 4,500 ha of no-till on small farms in Paraguay mostly utilising hand-hoes and matracas (Wall 1998). However, no-till is not permanently practised on most of this area and in fact seems to be only occasionally practised. It was difficult for the study team to try to piece together the extent to which no-till has spread on small farms in Paraguay. There is considerable uncertainty about the area and number of small farmers using no-till in Paraguay. DEAG estimates that there are 420 small farmers permanently practising no-till and using green manure crops with a further 1,510 occasionally using no-till. In Alto Parana/Itapua 300 small farmers are estimated to be permanently using no-till and 1,100 occasionally use no-till; in San Pedro/Concepcion 20 permanent and 60 occasional; while in other regions (principally Caaguazu, Cordillera, Paraguari, Misiones and Guaira) 100 permanent and 350 occasional. Probably these are over-estimates and need to be checked at the field level.

Since 1993, the MAG-GTZ Proyecto Conservacion del Suelo has been active in promoting no-till on small farms in Paraguay in five pilot regions (see Map 1). Support has been provided to extensionists of DEAG and in the provision of no-till machinery. Edelira is the area where most activities have been concentrated. In this region some 50 farmers are now permanently using no-till while some 300 occasionally use it (Magin Meza, pers. comm). In San Pedro, the other main focal area, it is estimated some 60 farmers are also permanently using no-till (Fabiano Cespedes, pers. comm). More accurate data is needed on the number of farmers involved and the areas either permanently or occasionally no-tilled.

The MAG-GTZ project has supported the formation of a small farmer no-till association in Edelira. Its impact has remained very small directly benefiting 80 farmers in Edelira (see Section 2.1). The MAG-GTZ project has also promoted international and national meetings on no-till in Paraguay. The impact of these has been quite impressive.

Also GTZ in association with MAG have been introducing green manure crops on small farms throughout Paraguay since 1990. Support has been provided for trials on green manure crops and soil tillage systems in Chore (Campo Experimental de Chore – DIA/MAG). Considerable efforts have been directed at introducing green manure crops to small farmers although again the number of farmers benefiting is not known.

More recently the MAG-GTZ Proyecto Conservacion del Suelo initiated a programme of recuperating soil fertility through the introduction of no-till and green manure crops in Paraguari. This programme was started in 1997 involving directly 11 small farmers. In these efforts GTZ have supplied seeds, fertiliser and no-till equipment.

It is clear from interviews and field observations that the spread of no-till amongst small farmers in Paraguay is very slow. The reasons for this need to be fully studied and understood. So far no-till and green manure crops have only been adopted in areas where there has been extensive and high quality technical assistance. Another important factor to note is that it has also only been practised where the seeds of green manure crops and no-till equipment have been supplied through projects free of charge to small farmers. These efforts have been worthwhile and interesting to prove that technically no-till can work on small farms. However, a lot of sustainable development initiatives and supportive policies will need to be put in place before a significant number of small farmers will be able to benefit from the technique of no-till.

Small farms are a significant part of the Paraguayan agriculture. According to the most recent data there are 248,000 small farms of less than 20 ha occupying 1.5 million ha corresponding to 6% of the total agricultural area. The breakdown of small farms by farm size is shown in Table 1.

Source: Censo Agropecuario Nacional de 1991

Small farms of less than 1 ha are quite insignificant both in terms of number and the total area they occupy. Many of these farmers, as well as those on farms of 1-5 ha, are dependent on other sources of income for their livelihood. Therefore, it is small farmers on farms of 5-20 ha, which total almost 139,000 (54% of the total number of all small farms) and occupy 1,237,460 ha (84% of the total area of all small farms), which are most dependent on their farms for their livelihoods. It is these small farmers, i.e. with areas of 5-20 ha, who are the most receptive of new ideas and introducing new technologies on their farms.

Small farmers make a major contribution to the Paraguayan economy. The whole agriculture sector generates 26% of the economy’s Gross Domestic Product, provides 37% of all jobs and 90% of all exports (Dietze, 1997). Despite the comparatively small area occupied by small farmers, over one third (35%) of the total value of agricultural production is generated by them (Dietze, 1997). Most of the actively employed persons in agriculture are small farmers. On top of this, small farmers are the major producers of a host of products, both food and export crops as shown in Table 2.

Source: Dietze, 1997 based on Censo Agropecuario Nacional de 1991

According to World Bank (1995), some 1.2 million people live on small farms. This represents 57% of the total rural population and 29% of the total population recorded in the most recent population census of 1992. Observing population statistics of the last three censuses (see Table 3), it is quite evident that there has been an increasing urban drift. While the total population has increased on average per year 3.2% during the period 1982-92, the rate of increase of the urban population has been much greater than the rural population. In 1972 the urban population was 37% of the total, while in 1982 and 1992 it had increased to 43% and 50% respectively.

Source: Compendio Estatistico, Presidencia de la Republica, Paraguay, 1994

Increasing urban drift is due primarily to declining rural incomes, particularly those of small farmers. Terms of trade have been moving against small farmers, i.e. input costs have been increasing at a faster rate than product prices, with the latter characteristically oscillating up and down over time. However, there is another underlying cause to the demise of the small farming sector – declining crop yields. This study has shown that the yields of cotton, soja, tobacco and maize have been falling rapidly on small farms (see crop yield trends – Appendices A1. and A2). Declining productivity is due mainly to falling levels of soil fertility. Small farmers have been using inappropriate conventional cultivation systems with very little if any adoption of soil conservation methods, generally no use of fertiliser and other yield-enhancing inputs, in labour-intensive production systems. Serious water-borne erosion has been depleting the fertility of soils and degrading their structure.

The World Bank (1995) report indicates that 80% of small farm families live below the poverty line. As a consequence of this, rural poverty has been increasing and small farm families have been suffering from health, education and nutritional deficiencies.

Faced with declining incomes and increasing poverty, many rural families have been selling their farms and moving to town in an attempt to break-out of their vicious cycle of downward spiralling standards of living. Sadly and ironically, many find themselves confronting worsening levels of poverty in urban centres. Families find the proceeds from the selling of their farms rapidly dwindle, jobs are difficult to find and their costs of living escalate with a need to purchase all of their food requirements.

2.1 Objectives

There were two main objectives of the study documented in this report. The first objective was to analyse the economics of no-till compared to conventional cultivation on small farms in two distinctly different zones of Paraguay. The locations studied (see Map 1) were (i) Edelira District in the Department of Itapua and (ii) San Pedro District in the Department of San Pedro. Edelira is representative of the heavier clay soils in the Departments of Alto Parana and Itapua, and part of Canindeyu, in eastern Paraguay. San Pedro is representative of the lighter sandy soil zones in the Departments of San Pedro, Caaguazu and part of Canindeyu.

The second objective was to elaborate a programme for the recuperation of soil fertility of the extremely degraded soils in Central Paraguay (refer to Map 1 where these areas are shown). This part of the study focused on the Districts of Paraguari and Ybycui in the Department of Paraguari which are representative of the severely degraded soil zones. A supplementary objective was to evaluate the economics of (i) recuperating the fertility of these extremely degraded soils and (ii) introducing no-till/green manure crops into small farm systems.

2.2 Methodology

The methodology used was in-depth case-study analysis of representative farming systems. Local experienced extensionists selected the farms included in the study. These farms were considered representative of the majority of small farms in the three zones chosen for the study.

The approach to the study was fourfold:

1. All secondary sources of data relevant to small farming systems in the three areas selected for the study were analysed. The most recently available agricultural census (Census Agropecuario Nacional 1991), Sinteses Estadisticas for the years, 1992/93-1996/97 and MAG-GTZ (1996), provided insightful information and data.

2. In-depth interviews with experienced extensionists in each of the districts studied to define the most representative small farm systems.

3. Typical farmers of the most representative farming systems were selected by the local extensionists for in-depth informal interviews by the study team. Interviews mostly took half to one day to complete with each farmer.

4. Data obtained from the in-depth interviews were analysed by describing the farming system and by preparing detailed crop budgets and complete farm budgets of each farming system. Wherever possible temporal analysis of data was carried out to study the impact over time of no-till and conventional cultivation.

Using the data obtained from the farmers interviewed, budgets were prepared for all of the major activities on the farms. In these activity budgets all production was valued at farm gate prices and all direct costs were calculated which included both the fixed and variable costs directly attributable to each activity valued at their market opportunity cost. Thus, for example, all labour used on the activity was valued at today’s market rate labour irrespective of whether family labour or contract labour was used. In the case of land preparation activities, these were valued at the market rate for animal traction, irrespective of whether the farmer had his own working oxen or had to hire them. In the case of farm production consumed on the farm, this was also valued at the farm gate price of the produce. The analysis used, while simplifying the "real" financial situation confronted by each farmer studied, is nevertheless adequate and most appropriate for meeting the objectives of the study.

The analysis used is a partial one. This means that all of the fixed farm costs are valued. Those that remain unaltered with or without no-till have been ignored. Thus, for example, the value of the land and the fixed costs of the farm buildings are ignored, since these remain the same under the two alternatives evaluated. However, all farm costs, both fixed and variable, that differ under conventional cultivation and no-till, are taken into account. Hence the costs of conventional or no-till machinery are accounted for.

No-till has only recently been introduced on small farms in Paraguay. In each of the three zones chosen for the study experiences with no-till varied substantially. In Edelira and San Pedro, farmers have experience with no-till for up to 7 and 4 years respectively. In these districts typical adopters, as well as non-adopters of no-till, were selected for in-depth interviews. In Edelira four farming systems were analysed in detail, one of each type of three no-till farming systems that have evolved in the district, as well as one conventional tillage farming system. In San Pedro, three farming systems were studied. Two with 2-years experience of no-till, as well as one typical conventionally cultivated farm.

No-till has not yet been introduced into Paraguari because of the extremely degraded soils. A new technological approach is needed to first restore soil fertility to economic levels. Five representative farming systems were selected for in-depth study, four within relatively close proximity of Paraguari and the other close to Ybycui.

In addition, interviews were held with other farmers in the three districts chosen for the study but these farms were not studied in-depth due to a lack of time, and / or, because they were not representative of the majority of farming systems.

The study was conducted during 2 months of field work in Paraguay by the authors followed by one month in New Zealand by the principal author to complete the analysis phase and to write the report.