Production:

FAS Quito forecasts Ecuador's corn production in MY 2015/16 at 1.27 million metric tons (MMT), up from the MY 2014/15 estimate of 1.22 million metric tons. We attribute the upward trend in production to the government requirement that local animal feed manufacturers buy up production, despite domestic prices being higher than international prices. Also production is up thanks to programs promoting national corn self-sufficiency.

The government requires that the price paid for local corn (US$15.90/100 pound sack) match or exceeds the cost-insurance-freight (CIF) cost of imported corn. Sources comment that the requirement will remain in place for the foreseeable future in order to stimulate domestic production. Previously domestic corn production fluctuated widely.

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

May 2013

May 2014

May 2015

Ecuador

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

320

320

330

340

0

340

Beginning Stocks

61

0

81

81

0

18

Production

1,100

1,100

1,055

1,220

0

1,270

MY Imports

200

200

300

43

0

75

TY Imports

200

200

300

43

0

75

TY Imp. from U.S.

0

200

0

0

0

0

Total Supply

1,361

1,300

1,436

1,344

0

1,363

MY Exports

5

5

5

1

0

2

TY Exports

5

5

5

1

0

2

Feed and Residual

1,200

1,200

1,250

1,250

0

1,265

FSI Consumption

75

75

100

75

0

75

Total Consumption

1,275

1,275

1,350

1,325

0

1,340

Ending Stocks

81

81

81

18

0

21

Total Distribution

1,361

1,361

1,436

1,344

0

1,363

1000 HA, 1000 MT, MT/HA

FAS Quito estimates yields of 3.6-3.7 MT/hectare in MY 2014/15; we forecast similar yields for MY 2015/16. Corn yields are improving through the expanded use of higher-yield seeds.

Consumption:

FAS Quito forecasts Ecuador's corn consumption at 1.34 MMT in MY 2015/16, up 15,000 MT or almost one percent from the MY 2014/15 estimate of 1.32 million metric tons. We estimate MY 2014/15 corn consumption up 3.9 percent compared to the previous marketing year. We attribute overall weak consumption growth in MY 2015/16 due to heavily oil-export dependent Ecuador struggling with lower international petroleum prices.

Local feed meal production, which incorporates corn as one of its main ingredients, will continue nonetheless to utilize corn. FAS Quito estimates that 65 percent of local feed production is utilized by the national poultry industry; 20 percent in turn is absorbed by the aquaculture sector (mainly shrimp farmers) and 12 percent taken up by pork producers.

Ecuador's corn consumption is dependent on the demands of the animal feed sector, along with the availability of lower-priced corn substitutes. The poultry sector alone is expected to grow three percent between 2014 and 2015. Per capita consumption of poultry meat is estimated at 35 kilograms/annum. The poultry flock in 2014 is estimated at 250 million birds, broken down into eight million egg layers and 242 million broilers

Trade:

FAS Quito forecasts Ecuador's corn imports in MY 2015/16 at 75,000 MT, up some 32,000 MT compared to the MY 2014/15's most recent estimate of 43,000 metric tons.

Despite continued strong demand for corn, imports are set to trend downward over time. The Rafael Correa administration is reportedly determined to slow (and eventually eliminate) imports through the substitution of increased domestically produced corns. In the past imports filled about half of Ecuador's corn needs.

Ecuador is a minor exporter of corn, primarily shipping to neighboring Colombia white and yellow corn for human consumption. With farmers receiving higher than normal prices on the domestic market, there is little incentive for them to shift production to exports.

Policy:

Corn imports are assessed a 15 percent ad valorem duty (based on the CIF value), plus the APBS variable levy. The Andean Community set floor and ceiling prices for yellow corn are currently at $269/MT and $328/MT. The variable levy for corn remains at 30 percent; foreign corn faces as a result import duties of 45 percent. Upon accession to the World Trade Organization (WTO), Ecuador bound its tariffs (including the additional APBS levy) for corn at 45 percent. Ecuador also maintains a worldwide corn tariff-rate quota (TRQ) of 19,600 MT at 25 percent tariff rate. This TRQ normally fills whenever international corn prices drop, and the APBS increases duties beyond 25 percent (i.e., 15 percent ad valorem plus a variable levy of over 10 percent).

The government subsidizes small farmer corn production. The National Seeds Project for Strategic Agricultural Groups, in cooperation with 17 companies, by 2015 already covers 150,000 hectares. Through this program, the government seeks to reach yields of 6 MT/hectare.

The National Seed Project for Strategic Agricultural Groups covers yellow corn production in the provinces of Los Ríos, Guayas, Manabí, Loja, Orellana, Sucumbíos, Napo, Esmeraldas, and Imbabura. Farmers planting 10 hectares or more are subsidized 40 percent of the technical package costs (seeds, crop protection products, fertilizers, and technical assistance), an amount equivalent to $214 per hectare. The program has resulted in yields increasing to 5 MT/hectare.