Peru Buys More Canadian Wheat Despite the High Price
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Peru’s Wheat production in MY 2023/2024 (June/July) is forecast at 205,000 MT, a slight increase compared to the previous year’s estimate. Wheat in Peru is a minor cash crop, with production concentrated in the southern highlands between 2,800 and 3,500 meters above sea level. Wheat is produced by small farmers who operate less than one hectare and remains limited by difficult and mountainous geography and rudimentary production practices. Peru grows mostly soft Wheat, which is unsuitable for milling and primarily consumed directly in purees or as a soup ingredient.
The total area harvested in MY 2023/2024 is projected at 120,000 hectares. The harvested area of Wheat can vary significantly from one year to the next depending on local Wheat prices, farmers’ profit margin expectations, and the profitability of alternative crops such as quinoa, barley, and oats. The average yield in MY 2023/2024 is expected at 1.7 MT per hectare. The planting season for Wheat was delayed by a severe drought that lasted most of 2022.
Domestic millers continue to finance a social program to encourage durum Wheat cultivation for pasta production. Millers provide small farmers with seed and technical assistance and guarantee the purchase. These farmers produce 12,000 MT of durum Wheat for a pasta production plant in Arequipa (approximately 1,000 kilometers south of Lima).
Total Wheat consumption in MY 2023/2024 is forecast at 2.4 MMT, increasing slightly compared to the previous year’s estimate. Wheat consumption is 67 kilograms per capita, a relatively low level compared to potato and rice consumption of 115 and 74 kilograms per capita, respectively. Wheat consumption is relatively constant, increasing at about the same rate as economic growth.
The consumption of Wheat and Wheat products has been impacted by the economic crisis from the pandemic and the ongoing political crisis. Consumption and Wheat product manufacturing has remained nearly the same as in CY 2021 and 2022. FAS Lima estimates that consumption and manufacturing will increase as the economy recovers. Peru’s GDP is expected to grow 2.4 percent in 2023.
In CY 2022, Peru produced about 1.6 MMT of Wheat flour annually. Of this amount, the local baking industry uses 63 percent, 20 percent goes into pasta manufacturing, 12 percent into the cookies and crackers sector, and five percent goes into small-scale family use. Approximately 70 percent of domestic flour is sold through traditional markets. The remaining 30 percent of flour is sold in supermarkets.
Peru imports Wheat duty-free from all sources. Although Peru does not explicitly promote Wheat production, the Government has credit and technical assistance programs for all farmers. Most credits are granted through the Ministry of Agriculture’s agencies, such as Agro Rural and AgroIdeas, or the Agricultural Bank.
Wheat Import in Peru
Wheat imports in MY 2023/2024 are forecast at 2.25 MMT. Wheat imports in CY 2022 were 2.05 MMT, recovering 3 percent compared to the previous year. Canada led the Peruvian Wheat market in CY 2022 with a 50 percent market share (down from 77 percent in the previous year), followed by the United States with a 12 percent market share. Argentina became a strong Wheat supplier in CY 2022, increasing shipments by 317 percent and capturing 36 percent of the Peruvian market share.
According to AgFlow data, Peru imported 295,000 tons of Wheat from Canada in Jan-Apr 2023, followed by the United States (85,691 tons) and Argentina (51,900 tons). Canadian Wheat prices (C.I.F.) averaged $429 per MT, an increase of 48 percent compared to the previous year, while U.S. Wheat prices averaged $358 per MT, increasing 32 percent. Argentina’s Wheat prices were very competitive in CY 2022, with average import prices at $324 per MT.
Other sources: USDA
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