Luis Rojas, head of Paraguay's SENAD

Paraguay's top anti-drugs official has said Uruguay's legalization of marijuana will spur an increase in production in his country, based on claims illegal Paraguayan product will undercut prices imposed by the Uruguayan government.

Speaking to EFE, Luis Rojas, the head of Paraguay's National Antidrugs Secretariat (SENAD), said of Uruguay's recently-passed legislation to legalize the cultivation, distribution and purchase of marijuana: "We are more than convinced it is going to stimulate internal consumption and thus the trafficking of marijuana towards there."

SEE ALSO: Uruguay: Marijuana, Organized Crime and the Politics of Drugs

According to Rojas, illegal Paraguayan marijuana is considerably cheaper than that which will be sold in Uruguay, with a kilo bought for $60 at the Paraguayan border and sold for $300 inside Uruguay -- less than 30 percent of the $1 per gram price, which has been suggested will be the standard in Uruguay.

Paraguay is South America's largest producer of marijuana, and second in the region behind Mexico. According to SENAD, between 5,000 and 8,000 hectares of the plant are cultivated each year, with an annual yield of approximately 6,000 kilos per hectare, totaling a nationwide production of between 30,000 and 48,000 tons each year. 

As Rojas points out, 80 percent of the marijuana produced in Paraguay goes to the Brazilian market, which has led to a growing presence from the country's two principle organized crime groups, the First Capital Command and the Red Command.

InSight Crime Analysis

While other countries from the region have suggested Uruguay's legalization law places it in contravention of regional agreements, this is the first time a neighboring country has criticized the bill by suggesting it will have a directly adverse effect on them.

While Rojas may be correct on the subject of Paraguayan marijuana undercutting that legally produced in Uruguay, he fails to acknowledge the fact that Uruguayans will be legally allowed to cultivate their own plants, therefore possibly reducing the number of people purchasing the drug. Paraguayan product is also known to generally be of a lower quality, so users would need to smoke more to produce the same high -- a fact unlikely to be lost on regular consumers. These regular users are also those who are most fervently in favor of the legislation, meaning a significant proportion would likely pay the extra cost to support a policy which is still unpopular among the majority of Uruguayans.

What's more, with the vast majority of marijuana destined for Brazil, the Uruguayan domestic market is not terribly significant to Paraguayan producers. If demand were to increase in Paraguay as result of increased consumption in Uruguay, it would not be likely to occur in such volume as to radically alter Paraguayan production levels.