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Peru's Drought Could Boost Demand for US Rice

Peru's Drought Could Boost Demand for US Rice

31 March 2014

PERU - Peru has been a small importer of US rice but that could change in the next few months due to drought conditions in a major rice-producing region.

Peru's 30 million citizens eat a lot of rice - annual per capita consumption hovers around 130 pounds, and it appears to be growing. Overall rice consumption in Peru has increased roughly seven percent over 2012-13 market data. Current wholesale prices for domestic milled rice in Peru are roughly $880/ton (5 per cent broken grain) and $850/ton (10 per cent broken grain) making US rice extremely competitive.

The lingering drought in Piura and Lambayeque provinces in the north, which produce roughly 30 per cent of the rice in the country, could lead to a 30-40 per cent decrease in rice production equal to approximately 270,000 tons of rice.

Uruguay typically supplies about 80 per cent of Peru's rice, despite a $170/ton premium over Thai rice; Argentina, Brazil, and Thailand fill in the lion's share. USA Rice Federation representatives in country report that over the last few months, Peru has started to look to other rice exporting markets such as the US, and they have begun importing US milled rice in small quantities with good acceptance for its quality and cooking characteristics.

Currently, the US cannot export paddy rice to Peru due to a pending phytosanitary protocol. However, local sources report significant progress has been achieved in negotiations with SENASA (National Service of Agrarian Health of Peru) and there is strong belief that the ban could be lifted by the end of this calendar year.

"This would be a great boon to U.S. rice paddy exports," Brian King, chairman of USA Rice's Western Hemisphere Promotion Subcommittee added. "This market has great potential, and we look forward to working closely with the Foreign Agricultural Service in Peru and USDA's Animal and Plant Health Inspection Service to improve access for all types and forms of US rice."

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