Highlights

Peru’s fishmeal production in MY2017/2018 is forecast by FAS Lima at 730,000 MT, an increase of 11 percent from the previous year, but overfishing and stocks management will continue to challenge the industry going forward. Peru continues to export the majority of the fishmeal it produces to China. Warmer water temperatures caused by El Niño or other phenomena will continue to put downward pressure on fish oil extraction rates. FAS Lima forecasts soybean meal imports will increase slightly to 1.23 MMT in MY2017/2018 linked to increased corn imports for animal feed. Peru’s soybean oil consumption will continue to increase with economic growth.

Executive Summary

Fishmeal production in marketing year (MY) 2017/2018 (January-December 2017) is forecast at 730,000 metric tons (MT), 11 percent higher than the MY 2016/2017. This increase is, in reality, a return to normal levels since fishmeal production in MY 2016/2017 fell 12 percent compared to the previous year. Peru is the largest fishmeal producer in the world, accounting for 16 percent of the world’s production. Fishmeal exports in MY 2017/2018 are forecast at 725,000 MT, increasing 13 percent compared to the previous year. Average fishmeal price was $1,572 per MT in MY 2016/2017, falling 5 percent compared to the previous year. Soybean meal imports in MY 2017/2018 (January-December 2017) are estimated at 1.23 MMT, up one percent compared to the previous year. With a 52 percent import market share, low-cost producer Bolivia remains Peru’s main supplier of soybean meal, despite higher shipping costs than those offered by U.S. exporters. U.S. soybean meal exports to Peru increased 45 percent in MY 2016/2017.

Fish Meal

Meal, Fish

Market Begin

Peru

2015/2016

2016/2017

2017/2018

Jan 2015

Jan 2016

Jan 2017

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Catch For Reduction

2400

3500

2500

2800

0

3500

Extr. Rate, 999.9999

0.2917

0.2154

0.3

0.2357

0

0.2086

Beginning Stocks

12

12

97

42

0

48

Production

700

754

750

660

0

730

MY Imports

5

0

0

0

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

717

766

847

702

0

778

MY Exports

610

714

750

644

0

725

MY Exp. to EU

100

48

100

0

0

60

Industrial Dom.Consumption

0

0

0

0

0

0

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom.

10

10

10

10

0

10

Total Dom. Cons.

10

10

10

10

0

10

Ending Stocks

97

42

87

48

0

43

Total Distribution

717

766

847

702

0

778


Production

Peru’s fishmeal production in marketing year (MY) 2017/2018 (January-December 2017) is forecast at 730,000 metric tons (MT), 11 percent higher than the MY 2016/2017. This increase is, in reality, a return to normal levels since fishmeal production in MY 2016/2017 fell 12 percent compared to the previous year. Fishmeal production in MY 2016/2017 was 660,000 MT as a result of a reduced anchovy catch due to high levels of young fish (under 12 centimeters). In 2016, Peruvian officials allowed two fishing seasons, however, the second fishing season only just began on November 15 and lasted through January 2017.

Peru’s total catch for anchovy (Engraulis ringes), commonly known as anchoveta, in MY 2016/2017 was 2.8 million metric tons (MMT). Peru is attempting to better regulate its domestic fishing industry. Overfishing in previous years has adversely affected Peruvian anchovy stocks. Previously catch quotas were set at the 8.5 MMT level; however, quota sizes have been dropping steadily towards 3.5 to 4.0 MMT in an attempt to sustainably manage and rebuild stocks. Peru has two major fishing seasons and two main anchovy fishing grounds off its coast. The first fishing season is April-July for the north central coast and February-June in the southern coast. The second fishing season is November-January in the North Central part of the country and July-December in the South. These are only “reference” fishing seasons since they may vary significantly depending on fish availability and size. For example, in CY 2014 the fishing authority decided not to approve a second fishing season due to the scarcity of fish and their reduced size. In 2016, the first fishing season begun in July and the second one in late November which is a testament of the determination of Peruvian authorities to preserve the resource.

The government policy is focused on attaining more sustainable yields by issuing individual quotas per vessel, as well as by restricting the number of fishmeal processing plant licenses that it issues. Peru also bans the catch of fish below a minimum threshold size of 12 centimeters (i.e. juveniles). These efforts have not succeeded in adequately protecting fish stocks. One of the key reasons why anchovy stocks continue to face pressure from overfishing is due to the exemption extended to small-scale/artisanal vessels (i.e. those with displacement tonnages of up 10 MT) to fish year round within 10 nautical miles from the coast.

The small-scale/artisanal vessel catch is supposedly intended for low cost, direct human consumption. But despite the government’s efforts, most of this catch is channeled illicitly to more profitable fishmeal processing. Troubling for the long-term health of this fishery is that poorly regulated small-scale/artisanal vessels normally operate where the bulk of anchovy spawning occurs and juveniles congregate. Peru produces two fishmeal types or grades. Fair Average Quality (FAQ) fishmeal has a protein content ranging between 62 and 65 percent and is dried by direct heat. More valuable Prime Quality fishmeal, indirectly dried by steam, has a protein content of 66 to 67 percent.

There are about 90 licensed fishmeal processing plants in Peru. The country’s fishing fleet numbers 984 vessels, of which 684 are steel haul boats with average storage capacity of 500 cubic meters. The remaining vessels are wooden with an average storage capacity of only 100 cubic meters. The fishing fleet’s processing capacity is about 7,500 MT per hour, an amount that, if reached, would be four times greater than the permissible catch.

Consumption

Local fishmeal consumption is insignificant, primarily used for shrimp production, and has little to no effect on the export market. Domestic consumption in MY 2017/2018 is forecast at 10,000 MT. Domestic consumption is expected to remain steady, despite growing demand from northern Peru’s shrimp farms, as high international prices channel domestic fishmeal production towards the more lucrative export market. Peru’s own aquaculture feed demand is filled increasingly by more affordable imported soybean meal.

Trade

Peru is the largest fishmeal producer in the world, accounting for 16 percent of the world’s production. Fishmeal exports in MY 2017/2018 are forecast at 725,000 MT, increasing 13 percent compared to the previous year. Average fishmeal price was $1,572 per MT in MY 2016/2017, falling 5 percent compared to the previous year. Fishmeal is Peru’s fourth largest export in value-terms, behind only gold, copper, and petroleum exports in importance. Total exports reached $1.01 billion in MY 2016/2017.

China will remaining Peru’s leading fishmeal export market for the foreseeable future. China alone absorbed 70 percent of Peru’s MY 2016/2017 fishmeal exports. Other important markets are Germany, Vietnam and Japan.

Policy

Mounting concerns by the Ministry of Production over the declining fish stocks are forcing Peru to tighten its regulations. The Vice Ministry of Fisheries within the Ministry of Production oversees Peru’s fisheries. Overfishing has forced the Ministry of Production to slash fishing quotas by 68 percent, and ban large-scale industrial anchovy fishing within 10 miles of Peru’s coast. The Vice Minister for Fisheries decreed recently for the establishment of boat specific quotas, as opposed to the current system of an overall fishing quota for the entire industry. Individual boat quotas are now set based on the vessel’s historic catch record and its proven storage capabilities.

The Ministry of Production is responsible for enforcing the fishing quota. Their inspectors stationed along the coast monitor that no fish is being unloaded at processing plants during the fishing ban. During fishing season, inspectors monitor boats to ensure that allotted fishing quotas are not exceeded. Though these are important measures, industry sources report there are still non-registered plants and boats operating in Peru.

Fish Oil

Production

Fish oil production in MY 2017/2018 (January-December 2017) is estimated at 135,000 MT, increasing 38 percent compared to MY 2016/2017. Fish oil production volumes will vary significantly with water temperature. Under normal temperature conditions, the oil extraction rate ranges between 8 and 10 percent. However, in unusually warm years the extraction rate may fall as low as one percent. The ongoing coastal El Niño weather phenomenon is bringing warmer waters to Peru’s shores during the second half of CY 2016. The warmer water results in lower oil extraction rates because of the fishes’ higher metabolism reducing stored fat. Fish oil production in MY 2016/2017 was 98,000 MT.

Trade

Fish oil exports in MY 2016/2017 totaled 94,993 MT. Denmark, Canada, the United States and Belgium were Peru’s largest fish oil export destinations. These four countries alone absorbed over 65 percent of Peru’s total fish oil exports in MY 2016/2017. Fish oil is an increasingly valuable feed ingredient for these countries’ aquaculture industries.

Soybean Meal

Meal, Soybean

2015/2016

2016/2017

2017/2018

Market Begin Year

Jan 2015

Jan 2016

Jan 2017

Peru

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Crush

2

2

2

2

0

0

Extr. Rate, 999.9999

1

0.5

1

0.5

0

0

Beginning Stocks

30

30

32

3

0

19

Production

2

1

2

1

0

1

MY Imports

1200

1087

1225

1220

0

1230

MY Imp. from U.S.

10

89

10

231

0

230

MY Imp. from EU

0

0

0

0

0

0

Total Supply

1232

1118

1259

1224

0

1250

MY Exports

0

0

0

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom.Cons.

0

0

0

0

0

0

Food Use Dom.Consumption

0

0

0

0

0

0

Feed Waste Dom. Cons.

1200

1115

1220

1205

0

1235

Total Dom. Cons.

1200

1115

1220

1205

0

1235

Ending Stocks

32

3

39

19

0

15

Total Distribution

1232

1118

1259

1224

0

1250

Trade

Soybean meal imports in MY 2017/2018 (January-December 2017) are estimated at 1.23 MMT, up one percent compared to the previous year. Peru does not grow soybeans in commercially significant quantities, nor does it currently produce soybean meal. Peru’s limited soybean crushing capabilities are dedicated solely to producing full fat soybean meal for feed purposes.

Soybean meal import demand is fueled by Peru’s dynamic poultry industry. Peruvians currently consume about 55 million birds per month. Poultry meat constitutes one of Peru’s most affordable sources of animal protein, and an estimated 1.65 MMT was consumed in CY 2016. Poultry consumption in Peru is estimated at 46 kilograms per capita, with consumption as high as 70 kilograms per capita in Lima. Soybean meal constitutes about 12 percent of total broiler rations in Peru’s thousand plus poultry farms. With a 52 percent import market share, low-cost producer Bolivia remains Peru’s main supplier of soybean meal, despite higher shipping costs than those offered by U.S. exporters. U.S. soybean meal exports to Peru increased 45 percent in MY 2016/2017. The strong market for U.S. corn explains this increase since importers are able combine vessel shipments of corn with soybeans. Soybean meal from all origins enters Peru duty-free.Peru imported 262,834 MT of soybeans in MY2016/2017 for full-fat meal production, of which the U.S. supplied 145,494 MT.

Biotechnology

In 2012, Peru established a 10-year biotechnology moratorium on planting biotech crops and animals for reproductive purposes. This law eliminated the Peru’s biosafety protocol, which had been drafted and cleared by the Ministries of Agriculture and Environment. Until this measure’s passage, the biosafety protocol established the legal framework for the research, production, and trade of genetically engineered (GE) crops. While the moratorium excludes imported commodities such corn and soybean meal, these products still must undergo a costly risk assessment to enter the Peruvian market. Peru’s Consumer Code includes mandatory labeling requirements for GE products. The initial draft of the regulation law establishes mandatory labeling with no minimum threshold level, forcing food processors to determine the amount of GE content by input. There are at least 30,000 different products currently on Peruvian supermarket shelves that contain GE content. The Peruvian food-processing sector asserts that if approved and enforced, the measure will impose an excessive burden on this industry.

Soybean Oil

Trade

Soybean oil imports in MY 2017/2018 (January-December 2017) are expected at 390,000 MT, increasing 2 percent over the previous year. With a 79 percent import market share in 2016, Argentina remains Peru’s main supplier of soybean oil due to competitive pricing. Imported soybean oil is refined and bottled locally for retail sale. U.S. soybean exports to Peru in MY 2016/2017 were 45,912 MT.

Consumption

Soybean oil consumption will continue increasing in tandem with economic expansion. Peru’s gross domestic product (GDP) is expected to grow at 4 percent in 2017.