Paraguay’s oilseed processors are lobbying the government to allow duty-free soybean imports for the first time in order to keep their mills running as a drought slashes local production.

Industry group Cappro, whose members include Archer-Daniels-Midland Co. and Cargill Inc., proposed in January to waive import duties on soy for processing in Paraguay, which would make it economically viable to buy from other South American producers such as Argentina and Brazil. The government and Cappro are scheduled to discuss the matter on Tuesday, according to the group’s general manager, Sandra Noguera. Deputy Industry Minister Ramiro Samaniego said a decision hasn’t been made yet.

Paraguay’s soy crushers shipped 1.9 million tons of soy meal and 562,000 tons of soy oil in 2021, a 3% share of global exports worth a combined $1.4 billion. Meal is used in livestock feed; oil is for cooking and biofuels. Plants would have to stop operations from June until the next harvest in the first quarter of 2023 if they can’t import beans, Cappro said in an emailed response to questions.

Landlocked Paraguay’s soybean production supplements much larger harvests in neighbors Brazil and Argentina, making South America a powerhouse region for global soy markets. But with a La Nina-fueled drought ravaging crops, Paraguay’s harvest is unlikely to surpass 4 million metric tons, just 40% of what it produces in a good year. Soy futures in Chicago have rallied on the broader region’s woes.

Paraguay’s crushing mills have bought an average of 3.1 million tons of soybeans, or about a third of the local crop, in recent seasons. The majority of the harvest is exported unprocessed, mainly to rival mills in Argentina. The unprecedented step of importing soy wouldn’t completely compensate for lower domestic production, Cappro said.