Production:

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

Peru

USDA Official

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USDA Official

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USDA Official

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Area Harvested

520

487

550

500

0

525

Beginning Stocks

392

189

385

154

0

179

Production

1,720

1,541

1,800

1,700

0

1,800

MY Imports

2,232

2,232

2,300

2,300

0

2,300

TY Imports

2,232

2,232

2,300

2,300

0

2,300

TY Imp. from U.S.

1,385

1,536

0

1,600

0

1,600

Total Supply

4,344

3,962

4,485

4,154

0

4,279

MY Exports

9

10

10

10

0

10

TY Exports

9

10

10

10

0

10

Feed and Residual

3,600

3,438

3,700

3,600

0

3,750

FSI Consumption

350

360

375

365

0

365

Total Consumption

3,950

3,798

4,075

3,965

0

4,115

Ending Stocks

385

154

400

179

0

154

Total Distribution

4,344

3,962

4,485

4,154

0

4,279

1000 HA, 1000 MT, MT/HA

Corn production in MY 2015/16 (October/September) is estimated to reach 1.8 MMT, up 6 percent from MY 2014/2015. Growing demand from the poultry industry explains this increase. Over the past five-years, yellow corn production has grown steadily to meet feed needs.

Peru grows many varieties of corn of which the two most important are starchy corn for human consumption and yellow corn for feed. Starchy corn production in CY 2014 was 302,000 MT while production of yellow corn was 1.2 MMT.

Harvested area in CY 2014 was 213,000 hectares and 274,000 hectares for starchy and yellow corn respectively. Average yields in CY2014 were 1.42 MT per hectare for starchy corn and 4.52 MT per hectare for yellow corn. Yellow corn yields vary greatly depending on the locality and producers' access to technology (i.e., improved seeds, fertilizer, irrigation, and mechanized equipment). In Peru's coastal agricultural areas yellow corn yields improved significantly over the course of the past decade, from about 6.5 MT/hectare to over 8.8 MT/hectare. On the eastern slope of the Andes, in Amazonian fields the yellow corn yields fell to 2.1 MT/hectare and lower due to degraded soils and less sophisticated production methods.

Consumption:

Corn consumption in MY 2015/16 is forecast at 4.1 MMT, increasing 2.5 percent compared to the previous year. Strong demand from the poultry sector is the main driver for increasing corn consumption. Peru currently produces 53 million broilers per month. About 70 percent of the yellow corn available in the country goes towards chicken feed to supply the country's 1,000 plus poultry farms.

A challenge that poultry producers face is the increasing number of informal (non-registered) poultry farms, a problem that becomes more evident when poultry prices are high.

These unregistered producers, which do not pay taxes, account for about 25 percent of overall poultry meat production. However, their non-tax contributing status precludes them from obtaining import permits for foreign corn, curtailing the possibility of additional U.S. corn imports.

Trade:

Peru's corn imports in MY 2015/16 are forecast at 2.3 MMT, remaining at the same levels as the previous year. Total corn imports in CY 2014 were 2.32 MMT of which 73 percent was originated in the United States.

Import Trade Matrix

(Metric Tons)

Commodity

Yellow Corn

Time Period

CY 2014

Imports from:

United States

1,698,439

Imports from Others

Argentina

571,065

Paraguay

37,747

Bolivia

4,775

Brazil

3,846

Total from Others

617,433

TOTAL

2,315,872

Peruvian feed and poultry producers continue claiming that Argentine and domestically produced corn is cleaner and flintier than U.S. corn. However, due to trade preference advantages granted under the U.S.- Peru Trade Promotion Agreement, U.S. corn was imported into Peru at significantly lower prices, between $50 and $80 per MT.

Peru is also importing for testing purposes dried distiller grains with solubles (DDGS), seeking to improve the quality of domestically produced animal feeds. FAS Lima believes that U.S. DDGS have good market prospects. We estimate that Peru is a 100,000 MT market for U.S. DDGS.

Policy:

Corn enters Peru duty-free. Peru's unilateral elimination of import tariffs on most commodities eliminated many of the trade advantages afforded by the U.S.-Peru Trade Promotion Agreement (PTPA). However, the PTPA established a duty-free tariff rate quota (TRQ) of 500,000 MT for U.S.-origin corn with annual increases of 6 percent and full duty-free access within 12 years. The TRQ for 2015 is set at 709,260 MT, which was filled by January 7, 2015.

However, Peru also maintains a corn price band system. This price band imposes a variable levy aimed at ensuring that corn imports enter the market at a minimum threshold price (floor price). Peru imposes this tax on certain "sensitive" products (i.e., corn, rice, sugar and powdered milk). In-quota U.S. corn is imported duty free. Out of quota U.S. corn is assessed 10.5 percent duty under the price band system. Currently the price band system imposes a levy of $35 per MT to corn from other origins.

The levy is the difference between the Floor Price and the Reference Price plus an adjustment for insurance, freight and other inflationary factors. Both the floor price and the reference price are published by Peru's Ministry of Economy and Finance every fifteen days in the official gazette (El Peruano). If the international price is above the band, there is a tariff reduction. If the "reference" international price falls below the band, the product is assessed an additional tax that will increase the price at least to the floor price level.