The agreement represents a major blow to the conservative government of Horacio Cartes, following several months of protests.
Following pressure from campesinos' trade unions, Paraguay's government has agreed to implement the emergency bill for family agriculture, after it was approved in Congress.
The agreement was reached between the government and the Coordinadora Nacional Intersectorial, CNI, an umbrella group for several unions.
After weeks of negotiations, both parties found a consensus on the list of beneficiaries for the measures, which will essentially support victims of natural disasters such as last July's heavy rains.
The Congress gave the green light to the Agriculture Ministry to access extraordinary funds outlined in the emergency bill.
The Paraguayan Agriculture Minister Juan Carlos Baruja said in a news conference that about 100,000 victims of the weather could now benefit from governmental support.
Food packages of about 40 kilograms will be delivered to the small rural producers from October 16.
Beside food supplies, the emergency bill also includes financial benefits and help with restarting production.
The legislation provides the means to restructure the campesinos' debts.
The new plan would be extended on 10 more years, with no interest rate, for an amount of up to 25 minimum wages per producer — about US$9,000.
Campesinos will be also allowed to access other loans with a 10 percent interest year on a period of seven years, depending on natural disasters.