USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed
10 February 2012
USDA GAIN: Peru Grain & Feed Annual 2012
Corn production in Peru is forecast at 1.86 MMT for MY 2011 (October/September), a significant increase from the 1.49 MMT produced in MY 2010. Peru imported 1.9 MMT of yellow corn in CY 2011. U.S. corn exports to Peru dropped
significantly from 626,428 MT in CY 2010 to only 63,130 MT in CY 2011 as a result of Peru’s unilateral elimination of
import duties, causing the United States to lose the trade preference granted under the U.S. – Peru Trade Promotion
Agreement.Peruvian wheat imports in CY 2011 totaled 1.68 MMT. U.S. wheat exports to Peru in CY 2011 reached an all time record of 943,000 MT, accounting for 56 percent of the market share.
Commodities
Corn
Corn production in Peru is forecast at 1.86 MMT for MY 2011 (October/September), a significant increase from the 1.49
MMT produced in MY 2010. Higher prices and strong demand from the poultry industry are the driving force of this
increased production. Yellow corn production in Peru has been increasing steadily since international prices began rising.
There are several types of corn grown in Peru; the most important varieties are starchy corn (with production estimated at
255,000 MT in CY 2011), which is used directly for human consumption, and yellow corn (with production estimated at 1.24
MMT in CY 2011), which is primarily used in the animal feed industry.
Harvested area in MY 2011 is estimated at 320,000 hectares and 280,000 hectares for yellow and starchy corn, respectively.
Yields are expected to be around 3.96 MT per hectare for yellow corn and 1.17 MT per hectare for starchy corn. However,
yellow corn yields vary greatly depending on the production region and the producers’ level of technology. On the coastal
region these yields have increased from 6.5 MT per hectare to 8.8 MT per hectare in the past nine years. The use of
improved seeds and better cultural practices are the main drivers for this increase. In the rainforest, on the eastern slopes of
the Andes, yellow corn yields drop to 2.1 MT per hectare due to poor soil and less developed producers.
Consumption:
Chicken is a staple product in the Peruvian diet, with per capita consumption reaching about 34 kilograms per annum. Peru’s
44 million chicken-per-month poultry market is the major user of yellow corn, with corn accounting for about 68 percent of
the chicken feed. Yellow corn consumption is forecast at 3.4MMT in MY 2012.
There are about 20 poultry operations in Peru, which control around 1,000 farms. The largest producer, San Fernando,
controls about 35 percent of the market. Total market size for CY 2011 is estimated at $1.5 billion.
Informal producers (producers who are not legally established and do not pay taxes) are a major problem for the poultry
sector in Peru. These producers, which account for about 25 percent of the poultry meat industry, are not able to import corn
due the lack of appropriate registration with the tax authority and therefore rely solely on local corn. Informal producers are
constantly undermining the industry profitability with their lower prices, which result from not paying taxes.
Trade:
Peru imported 1.9 MMT of yellow corn in CY 2011. With 1.51 MMT, Argentina was the lead corn supplier to Peru in CY
2011. U.S. corn exports dropped significantly from 626,428 MT in CY 2010 to only 63,130 MT in CY 2011. This reduction
was the result of Peru’s unilateral reduction on import duties for corn, causing the United States to lose the trade preference
granted under the U.S. – Peru Trade Promotion Agreement.
Most feed producers and large poultry operations prefer to use Argentine or Peruvian corn over U.S. corn. They claim that
Argentine and Peruvian corn is harder and comes with fewer broken kernels. The average price of local corn was around
$327 per MT in CY 2011, an increase of 19 percent compared to the previous year.
Peru imported dried distiller grain with solubles (DDGS) for the first time in late 2010. During 2011 large poultry and dairy
operations continued testing DDGS in their feed. Post believes that alternative corn products such as DDGS have an
interesting potential and should be promoted in this market.
Policy:
Corn is imported into Peru duty free. Once Peru unilaterally eliminated import duties for corn imports, the United States lost
the trade preference granted under the U.S.-Peru Trade Promotion Agreement (TPA). The TPA established a duty free TRQ
of 500,000 MT, with annual increases of 6 percent and full duty free access in 12 years.
Peru’s corn production began in the late 1990s and was encouraged by the government’s import substitution program. This
program granted tax benefits to livestock operations outside of Lima that used only local corn in their feed. On the coast, the
third largest poultry producer in the country is purchasing only local corn through an agreement signed with corn producers
in the area. The largest poultry producer in Peru has begun producing part of its corn demands. This program and continued
high international prices will encourage domestic production and, therefore, import substitution.
The GOP does not have any direct subsidy or assistance program to encourage corn production. However, there has been
some support through rotating credit funds. The Ministry of Agriculture continues to support an agreement between corn
and poultry producers to encourage corn production in the eastern region of the country. This area is excellent for corn
production but transportation infrastructure is poor and in some cases does not exist.
Wheat
Production: Wheat production in MY 2011 (July/June) is forecast at 220,000 MT, a slight increase from the 214,000 MT produced in the
previous year. Wheat is a minor crop in Peru and is grown mostly in the southern highlands of the Andes (between 2,800
and 3,500 meters above sea level). Wheat producers are usually poor and apply rudimentary cultural practices. Most of the
wheat produced in Peru is soft wheat that is consumed directly in soups and purees. This type of wheat is not suitable for
milling.
Crop area for MY 2012 is forecast to remain at 160,000 hectares. Wheat area in Peru can vary significantly from year to
year depending on prices, profit expectations, and alternative crops such as barley and oats. Average yields in CY 2011 were
1.36 MT per hectare.
Peruvian wheat millers established a program to encourage small agricultural producers to grow durum wheat for their pasta
plant in Arequipa (about 1,000 kilometers south of Lima). Currently, they are producing around 11,000 MT but expect to
reach 25,000 MT in upcoming years. Millers provide improved seed and technical assistance to local producers and contract
production in advance.
Consumption:
Peru produces 1.3 MMT of wheat flour per year. Of this flour 63 percent is used by the baking industry, 20 percent for
pasta manufacturing, 12 percent in the cookies and crackers sector, and 5 percent for domestic use. About 70 percent of
domestic flour is sold in traditional markets, with 20 percent sold in supermarkets and 10 percent sold through other
distribution channels
The wheat milling industry in Peru is highly concentrated. Of the 23 mills in the country, the largest one accounts for over
60 percent of total wheat processed, and the top four mills are responsible for about 85 percent of the wheat milled in the
country. While Argentina has over 200 mills for 33 million people, Peru has only 23 for 30 million people. Revenues for
the milling industry are estimated at around $1 billion.
Bread consumption in Peru continues to be among the lowest in the region, per capita consumption is 28 kilograms per
annum compared to 37 kilograms in Ecuador or 95 kg in Chile. Most bread is purchased fresh in bakeries, and only 250
grams of bread per year are consumed in loaves, which is a two-fold increase over the last seven years. At 10 kilograms per
capita, Peru continues to be the second largest pasta consumer in South America. Lima accounts for half of the pasta
consumption in Peru, but growth in pasta consumption is increasing at a faster rate in the provinces. Peruvian cracker and
cookie consumption is still very low, around 70,000 MT per year and worth about $100 million.
Trade:
Peruvian wheat imports in CY 2011 totaled 1.68 MMT. For the second year in a row, the United States was the lead wheat
supplier to Peru. U.S. wheat exports to Peru in CY 2011reached an all time record of 943,000 MT, accounting for 56 percent
of the market share. Usually the Peruvian market is divided among the United States, Canada, and Argentina. However, due
to quality problems with the Argentine crop and insignificant price differences compared to U.S. wheat, Peruvian millers
preferred U.S. wheat in 2011. Peru’s wheat consumption increase in CY 2011 was partially due to unusual pasta demand
from Chile. Carozzi, one of Chile’s largest wheat mills, was destroyed by a fire in 2011 and had to buy pasta from Peruvian
mills to continue servicing their customers.
Peru’s wheat milling industry has become very sophisticated. The industry has evolved in the last 20 years from only buying
Hard Red Winter to importing many different types of wheat (such as soft, spring, white and Durum Northern Spring) for
blending.
Policy: Formatted TableWheat is imported into Peru duty free. The government of Peru does not have a specific program to promote wheat production. However, in recent years it has implemented credit and technical assistance programs to help producers improve their crops and somewhat fight high international commodity prices.
Rice, milled
Production:
Rice production for MY 2012 is forecast to decrease 14 percent to 1.68 MMT (milled basis). Delayed rains during the
2011/2012 planting season (October-December) resulted in less area planted and will most likely have a negative effect in
the upcoming season yields.
Harvested area for MY 2012 is estimated at 350,000 hectares. Rice in Peru is surface irrigated and dependent upon the
supply of water draining from rivers in the Andes Mountains. Most of the rice in Peru is harvested April through July.
Average price paid to producers for rice in CY2011 was $373 per MT of rough rice, an increase of 34 percent compared to
the previous year.
Peru’s most important rice producing areas are Lambayeque and Piura in the northern region and Arequipa in the south.
Since the northern Peruvian coast is basically a desert, rice production in that area has severely deteriorated the soil with salt
due to constant flooding. The government continues to encourage producers to move rice production to the eastern slopes of
the Andes due to the lack of water on the coast. This effort has been successful in increasing rice production in this area,
especially in the San Martin region. However, it has failed to move rice production out of the northern coast. Coastal rice
producers have no incentive for changing crops; water is almost free and returns on investment are high, particularly with
current international prices.
Average yields in CY 2011 were 7.36 MT of paddy rice per hectare, but some farmers have yields as high as 14 MT per
hectare. Since most of the production is carried out by small producers, rice quality and yields vary greatly depending on
input levels, which in turn depend on prices and economic conditions.
Consumption: Rice is a staple product in the Peruvian diet, with per capita rice consumption estimated at about 58 kilograms per year. Rice is traditionally sold in small markets, weighed, and bagged in 50 kg sacks. With the expansion of supermarket chains, several consumer habits, including purchasing of rice, have changed. There is a growing demand for prepackaged onekilogram bags of rice. Higher quality rice is generally marketed in this way.
Trade:
Rice imports into Peru in CY 2011 were 207,311 MT a significant increased compared to 94,498 MT imported in CY 2010.
This increased the result of a smaller local crop which particularly affected the beginning of CY 2011. The imported rice
market in Peru continues to be dominated by Uruguayan rice with a market share of 67 percent. However the Uruguayan
share of the market was significantly reduced from CY 2010’s 95 percent. Other sources such as Thailand and Argentina
were very active in the market and rice imports from the United States remained limited. Reportedly, higher prices from the
United States and a long standing relationship from a particular importer with a Uruguayan supplier, which includes
advantageous credit conditions, are two reasons that explain why there is a clear market leader in Peru.
Some Peruvian importers are interested in purchasing paddy rice from the United States, which is currently banned for SPS
reasons by SENASA (the Peruvian SPS authority). Post continues working closely with SENASA to lift the ban.
Policy: Rice is imported into Peru duty free. Once Peru unilaterally eliminated import duties for rice imports, the United States lost the trade preference granted under the U.S.-Peru Trade Promotion Agreement. The TPA established a duty free TRQ of 72,000 MT, with annual increases of 6 percent and full duty free access in 17 years
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