Yerba Mate Industry

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Yerba Mate Industry

The yerba mate economy has been limited to the Southern Cone of South America since the seventeenth century, with no significant involvement of external capital. It is an integrated industry: Argentina is the main producer, followed by Brazil and Paraguay. Uruguay and Chile are importers. According to recent estimates, approximately 500,000 tons of yerba are prepared worldwide each year (260,000 in Argentina, 180,000 in Brazil and 30,000 in Paraguay). World trade involves fourteen percent of this production (70,000 tons).

The product has spread beyond its region of traditional consumers to Syria and Lebanon (12,000 tons per year), with lesser imports by Israel, Saudi Arabia, and some African nations. Expansion of yerba mate production has been limited by a small growth of demand. (Demand for yerba mate is rigid; the product has no near substitutes and is considered an inferior good, with a negative income elasticity.)

The Jesuits (1608–1767) were the ones to begin cultivating yerba mate (a perennial plant native to South America that is dried and ground and then made into an infusion) and they became the leading suppliers of colonial markets. Its cultivation was abandoned during the nineteenth century and wild herbs from Paraguay, Brazil, and the Argentine province of Misiones were used. The crop was worked by unpaid laborers (mensúes) under the debt-based compulsory labor system.

In the mid-nineteenth century, the yerba mate industry expanded with the introduction of steam-driven mills, leaf classification practices, and control of the blend for consumption. The yerba mate market of the time is believed to have been almost entirely comprised of the populations of Argentina, Paraguay, Uruguay, and Chile, half of the population of Bolivia, one third of Brazil, and one quarter of Peru.

During the Paraguayan War (1865–1870), Argentina imported yerba mate from Brazil and several Argentine companies installed mills in that country. The Compañía Mate Laranjeira firm, backed by Argentine, Brazilian, and British capital, obtained the concession to exploit the wild herbs on two million hectares of the southern Mato Grosso.

Annual volumes of yerba mate producing countries (in thousands of tons), 1996
Domestic consumption200,000174,00040,000
Table 1

Argentina is the world's leading producer of yerba mate. Ninety percent of production comes from the Misiones province and the remaining ten percent from northeast Corrientes province. In Misiones in the early twentieth century, the Argentine government encouraged its cultivation through colonist farmers. Immigrants would receive 25-hectare plots with the obligation to plant yerba mate. As a result, the herb is now produced mainly on family farms, while the preparation and marketing are more concentrated and represent the more capitalized sector of the industry.

In Brazil, the yerba mate industry did not develop until the second half of the twentieth century, when its cultivation was promoted. The southern Brazilian states of Paraná, Santa Catarina, and Rio Grande do Sul are the leading producers. Paraguay's yerba mate production is located in the east (Itapúa, Canindeyú, Amambay and Alto Paraná) and is insufficient to meet domestic demand.

The creation of the MERCOSUR southern common market in 1992 and the elimination of harvest and planting quotas in Argentina in 1991 boosted exports to Brazil and Paraguay, countries to which Argentina had historically imported yerba mate. MERCOSUR, and Brazil in particular, became the leading destination of Argentine exports. Table 1 summarizes information on production, consumption, and foreign sales of yerba mate

The inelastic nature of the demand creates periodic crises of overproduction and the price of the product is highly dependent on regulation of trade between the southern nations of South America. The government regulated this activity in Argentina from 1935 to 1991. Deregulation favored the industrial part of the business (yerba mate mills) and negatively affected the 17,000 small farmers who grow the raw material, as the price of the leaf fell by almost sixty percent. Recent protests from farmers re-established government control in the form of the newly created National Yerba Mate Institute.

The yerba mate industry in southern Brazil is fragmented, however, characterized by small companies and no market leaders.

See alsoYerba Maté .


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                                           Gabriela Schiavoni