Currently, approximately 66% of the annual beef production is destined for export markets, while domestic consumption absorbs about 34%. This ratio means that the relevant price of beef—and, in particular, the price producers receive for carcasses—is determined primarily by international market conditions, where the main volumes of demand are concentrated.
Paraguay does not have the production scale to significantly influence global beef prices. Consequently, neither meatpacking plants nor local producers set prices; they take them from external benchmarks. This reality is even acknowledged in the report by the National Competition Commission (CONACOM), which identifies the implicit export price as the main determinant of the price paid to producers.
This starting point is crucial for any analysis of the sector. Assessing the existence of market power or anticompetitive practices without considering this structural condition can lead to incomplete interpretations, attributing to internal decisions phenomena that, in essence, respond to external forces linked to global supply and demand.
The available empirical evidence also confirms that the Paraguayan meat market has a robust price transmission mechanism between the international and domestic markets. Analyses show a strong correlation between the implicit export price of beef and the carcass price of different cuts in the local market. In terms of absolute values, the correlation between these two variables reaches 0.86, while, when analyzing year-on-year variations, the correlation is around 0.77. These coefficients reflect not only a statistically significant relationship but also consistent comomobility over time, both in magnitude and in adjustment dynamics.
This behavior is consistent with the so-called Law of One Price, according to which, in integrated markets and in the absence of significant frictions, homogeneous goods tend to converge toward a single price, adjusted for transaction costs. In the case of the Paraguayan meat sector, the strong export orientation, coupled with logistical, commercial, and sanitary integration with foreign markets, creates the conditions for international price signals to be transmitted relatively quickly and directly to the domestic market.
In this context, the carcass price acts as a domestic arbitrage price, reflecting the opportunities and constraints imposed by the international market. Fluctuations in external prices not only impact export revenues but also directly influence domestic price formation, conditioning margins, production decisions, and the expectations of the various agents throughout the entire meat supply chain.
This dynamic reinforces the idea that the domestic beef market does not operate in isolation but rather as an extension of the global market. In export-oriented economies like Paraguay, price transmission should not be interpreted as a distortion, but rather as a natural manifestation of the sector's degree of international integration.
Understanding this process is fundamental for analyzing the performance of the meat sector and for designing public policies aimed at strengthening its systemic competitiveness. In this regard, monitoring international prices, continuously improving primary productivity, logistical efficiency, sanitary compliance, and regulatory predictability emerge as central pillars for consolidating Paraguay's position as a competitive and reliable supplier of beef in international markets.