Paraguay Forestry & Timber Investment 2026

Sector Overview

Paraguay's forestry sector is the country's third strategic investment priority under the Ministry of Industry and Commerce 2035 plan. The sector generates over 80,000 direct and indirect jobs, operates 554 industrial establishments (70% sawmills), and has attracted over USD 200 million in private investment over the past five years.

The sector is transitioning from raw material exports to value-added processing. Plywood exports hit monthly records in 2025, veneer production is expanding, and the government's National Forest Policy - expected to become law in 2026 - will add further incentives for sustainable management and reforestation.

Key characteristics:

• Forest coverage: 17.8 million hectares (44.4% of territory), of which 82.7% is native forest
• Plantations: 340,000 hectares, expanding at 30,000-40,000 ha/year
• Exports: USD 101.3 million record in 2025, dominated by charcoal and processed wood
• Dominant species: Eucalyptus (98% of processed timber)
• Long-term potential: 8+ million hectares with high/very high forestry suitability (INFONA)

Export Products and Markets

Paraguay's forestry exports reached USD 101.3 million in 2025, a new record. The composition is shifting from raw materials toward processed products.

Product breakdown:

• Charcoal and briquettes: ~80% of export value (approximately USD 80 million). Paraguay is a major supplier to the US, UK, and German barbecue charcoal markets. Export price averages USD 376-434/ton.
• Plywood: Fastest-growing segment. May 2025 saw a record 2,925 tons exported. Major markets: Italy, Chile, Portugal, US, China. Average price ~USD 780-900/ton.
• Sawn wood: Exported to Israel, Taiwan, Uruguay, South Korea. Average price ~USD 350/ton.
• Veneers: Growing segment with exports to European and Asian markets.

Top export destinations: United States (USD 22.8M in wood/charcoal products in 2025), United Kingdom, Germany, Brazil, Spain, Italy, Chile, Portugal.

Plantations and Species

Commercial plantations in Paraguay expanded from 204,631 hectares in 2022 to 339,866 hectares in 2024 - a 66% increase in two years. The annual expansion rate is 30,000-40,000 hectares per year.

Eucalyptus species dominate commercial plantations, accounting for 98% of processed timber. Between 2015 and 2024, Paraguay exported 187,473 tons of eucalyptus products, with a record 34,602 tons in 2024. Eucalyptus is favored for its fast growth in Paraguay's subtropical climate.

• Rotation cycle: 7-12 years to harvest maturity
• Coppicing: Regrows from stump after harvest, allowing 2-3 additional harvests without replanting
• Other species: Paraíso (Melia azedarach), cedar, and pine are also planted but represent a small share

Plantations are concentrated in the eastern region: Concepción, Amambay, Itapúa, and Alto Paraná. Long-term potential is significant - INFONA classifies over 8 million hectares as having high or very high forestry suitability.

Investment Models

Forestry investment in Paraguay takes several forms, depending on scale and risk appetite:

• Plantation development: Purchase or lease land, establish eucalyptus plantations, harvest on 7-12 year cycles. Lowest processing complexity, longest return timeline. Suitable for investors with patient capital and land-holding capacity.
• Sawmill and processing: Acquire timber from plantations or third parties, process into plywood, sawn wood, or veneers for export. Higher margin than raw timber. Can operate under Maquila regime for export-oriented operations.
• Charcoal production: Convert timber or purchase from suppliers for charcoal/briquette production. Largest export segment by value. Requires kilns and packaging facilities. Export infrastructure to US/EU markets is well-established.
• Value-added products: Essential oils (petitgrain from bitter orange), engineered flooring, treated wood, biofuels. Higher margins but requires specialized knowledge and equipment.
• Carbon credits: Reforestation projects can generate carbon credits under Law 7190/2023 (National Carbon Credit Registry) or international standards (Verra, Gold Standard). Complements timber income.

Government Incentives

Forestry investments in Paraguay can access multiple incentive programs:

• Law 60/90: Tax exemptions on incorporation, customs duties on capital goods, foreign exchange taxes, and dividend taxes for up to 10 years. Applies to forestry investment projects approved by MIC.
• Maquila regime: 1% tax on value added for export-oriented timber processing. Suspension of all duties on imported raw materials and inputs. Ideal for sawmill and processing operations.
• Industrial parks: Infrastructure with energy, water, and waste treatment in designated forestry zones. Access to Law 60/90 + Maquila benefits simultaneously.
• Carbon credits (Law 7190/2023): National registry for carbon credit projects. Reforestation qualifies as a carbon sequestration activity.
• INFONA technical support: Free traceability certification, digital platform for export documentation, and technical assistance for plantation management.

The MIC 2035 strategy targets USD 775 million in forestry economic contribution, USD 818 million in GDP impact, and 67,000 new jobs - signaling long-term government commitment to the sector.

Regulatory Framework

INFONA (Instituto Forestal Nacional) is the regulatory authority for all forestry activities in Paraguay. Key requirements:

• Land-use change permit: Required to convert native forest to plantation. INFONA reports that 87.4% of Chaco land-use changes are now under approved plans.
• Management plan: All forestry operations must have an INFONA-approved management plan specifying species, harvest schedule, and replanting commitments.
• Traceability: INFONA's upgraded digital platform provides export documentation and traceability certification, increasingly important for EU Regulation 1115 compliance.
• Border Security Law: Properties within 50 km of international borders have foreign ownership restrictions. Most eastern plantations are outside this zone.
• Fire management: INFONA's Integrated Fire Management portal provides real-time satellite monitoring. Fire prevention plans are required for plantation operators.

INFONA launched "Paraguay Forestry for the World," an investment portal with maps, suitability data, and investment tools for foreign investors.

Practical Considerations

Entity structure: An EAS (Empresa por Acciones Simplificadas) is the most practical vehicle for forestry investment - formed online in 72 hours, no minimum capital, limited liability, and compatible with Law 60/90 and Maquila registration. See company types comparison for alternatives.

Land acquisition: Eastern region departments (Concepción, Amambay, Itapúa, Alto Paraná) have the most suitable conditions. Verify INFONA land-use classifications and Border Security Law compliance before purchasing.

Labor: The sector employs ~20,000 direct and 60,000+ indirect workers. IPS employer contributions (16.5% of payroll) apply. INFONA launched Paraguay's first Technical Forestry Baccalaureate in 2026 to build sector talent.

Export logistics: Timber products ship via the Hidrovía Paraguay-Paraná waterway (barge to Atlantic ports), road to Brazil and Argentina, or air freight for high-value items. See the logistics hub guide for infrastructure details.