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GLOBAL REPORT

Herb sweetens lives in Paraguay

Coca-Cola and Cargill are looking into using the stevia plant as a zero-calorie sugar substitute, which could create much-needed rural jobs.

August 06, 2007|Jude Webber | Financial Times

Placido Osuna points to a crudely stitched scar on his belly and thanks God for the little green herb that his sons encouraged him to grow instead of tobacco and cotton.

"Stevia saved my life," says the 68-year-old farmer, dressed in flip-flops and an open shirt, with a machete tucked into his belt. Without the income from this new cash crop, which is native to Paraguay and whose leaves contain compounds up to 300 times sweeter than sugar but are naturally calorie-free, Osuna says he could never have afforded gall-bladder surgery.

The shrub also enabled his son, Victoriano, to buy his own plot of land and a cow, as well as build a house with a metal, not thatched, roof.

Guilt-free sweeteners are a dream come true for bulging Western waistlines, and Coca-Cola Co. has recently unveiled an alliance with Cargill, the agribusiness giant, to develop stevia for mass-market use in soft drinks and food. They have isolated what they say is the plant's best-tasting sweet compound, with none of the bitter aftertaste that can accompany stevia, and are marketing it under the brand name Rebiana. Stevia does not alter blood sugar levels, giving it potential in the diabetic market.

For thousands of farmers across Paraguay, where the plant is called Ka'a He'e (pronounced "ka-ah-hey-ay"), meaning sweet herb in the native Guarani language, it offers the prospect of a ticket out of poverty.

About 70 miles north of the capital Asuncion, in the district of 25 de Diciembre where the Osunas live, the average family earns $18 a month and nearly one in three is unemployed. Despite a growing economy, at least 20% of Paraguayans are poor after widespread migration to towns where work is even scarcer.

"Stevia is key to generating rural jobs," says Christian Thielmann of Rediex, the state investment and export promotion agency. He is working with producers to boost stevia exports from just under $1 million now to $37 million by 2011 and to create 70,000 jobs.

Although Paraguay is the plant's birthplace, stevia spread to Asia in the 1970s, where it is now popular, and China grows 80% of the world's crop.

Cargill and Coca-Cola are expected to use Chinese stevia for their first products, likely to be launched in Asian and South American markets, until stevia wins regulatory approval as a sweetener in the U.S. and Europe.

But they see big potential for the plant in Paraguay, which has an advantage over China because the crop is a perennial that can be harvested three or four times a year, compared to China where it has to be replaced every year and harvested just once.

"It's cheaper to grow in South America because you get multiple harvests over multiple years," says Mary Lou Straley, a Cargill agronomist.

Although it requires regular weeding, stevia offers attractive returns: $1 per kilo for the producer -- double other cash crops such as soy, cotton, corn and sunflowers, said Juan Carlos Fischer, president of the Paraguayan Chamber of Stevia.

In two months, Victoriano Osuna will be harvesting his crop with the help of his wife, Balbina, and their four children ages 7 to 16. They slash the plants to near soil-level with machetes and dry the leaves in the sun.

Unlike the Osunas, Narciso Coronel, a neighbor who lives across the red dirt track, has yet to sign a contract with a company to supply stevia. He has been growing it four years but, like many farmers, lacks full deeds to his property that would enable him to qualify for a $590 government grant.

"Stevia hasn't changed my life yet, but I have hope," he says, as he squats barefoot to separate young seedlings. As he works, a show on the radio in the hut where he lives with no light or running water extols the crop's virtues.

Besides its sweetness, Fischer says stevia has antioxidant properties making it suitable for use in cosmetics and as an animal-feed and soil supplement.

Pharmaceutical claims that it does not cause tooth decay and can be used to treat the kind of diabetes showing up increasingly in obese children have yet to win regulatory backing.

But Thielmann predicts: "Cargill and Coca-Cola are going to revolutionize stevia worldwide and we think Paraguay can become a major industrial producer."

In 25 de Diciembre, farmers have seen the local price of their crop eroded by more than a third in recent years as the guarani currency fell against the dollar.

But Fischer says supply contracts have kept the dollar value to farmers stable and if the Coca-Cola/Cargill deal raises prices "that will be transferred to all producers."

Osuna's wife, Balbina, is hopeful. "If Coca-Cola is going to industrialize Ka'a He'e, that's very interesting. We hope that means the price on the local market will go up," she says.

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