Peru Corn: Low Yields Hinder Competition Against Suppliers
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Peru’s Corn production in MY 2023/2024 (October/September) is forecast at 1.2 MMT, remaining at the same levels from the previous year. Corn production for MY2022/2023 is estimated to fall 22 percent to 1.2 MMT. Corn producers faced a prolonged drought in 2022, which delayed planting. Then in March 2023, major floods throughout the country impacted planted areas, destroying about 15,000 hectares of planted area, including corn. This has added to the usual challenges local corn producers face: high production costs, low productivity, and lack of access to improved technology such as genetically engineered seeds.
Moreover, corn producers have faced fertilizer shortages for the past two seasons. Corn in Peru is produced mainly by small farmers with limited technology access, resulting in meager yields. The average feed corn yield in CY 2022 was 3.5 tons per hectare. These inefficiencies make it extremely difficult for producers to compete with other suppliers.
Peru grows many varieties of corn. The two most important varieties are starchy corn for human consumption and yellow corn for animal feed. Starchy corn production in CY 2022 was 357,000 MT, while production of yellow corn was 1.2 MMT. A challenge that poultry producers face that now creates risk for Peru’s corn market is the increasing number of informal (non-registered) poultry farms, a problem that becomes more evident when poultry prices are high. These unregistered producers, who do not always follow proper sanitary protocols, account for roughly 25 percent of poultry meat production. This problem has recently become more of an issue due to the presence of HPAI, which threatens Peru’s well-renowned poultry sector.
MY 2023/2024 is forecast at 4.4 MMT, an increase of two percent from the previous year’s estimate. Demand is estimated to fall 14 percent in MY 2022/2023 due to the impact of extended social unrest and HPAI on poultry production. Additionally, recent floods have also impacted poultry farms. Peru produces 65 million monthly broilers and has a flock of about 30 million layers. Approximately 70 percent of the yellow corn available is used as chicken feed in Peru’s poultry farms, which currently number over 1,000. Per capita consumption of poultry meat in Peru is estimated at 52 kilograms per person in 2022, one of the highest in the region. Per capita, consumption can reach as high as 70 kilograms per person in Lima.
Corn Trade in Peru
Peru’s corn imports in MY 2023/2024 (October-September) are forecast at 3.2 MMT, an increase of three percent from the previous year. Corn imports in CY 2022 were 3.6 MMT, decreasing two percent compared with the year earlier. Argentina dominated the Peruvian corn market in CY 2022, accounting for 92 percent of market share. U.S. corn imports totaled 87,169 MT. According to AgFlow data, Peru imported 0.3 million tons of Corn from Argentina in May 2023, followed by the US (23,130 tons). Total imports reached 1.1 million tons in Jan-May of this year.
Imports prices (C.I.F) of Argentine corn in CY 2022 averaged $293 MT (an increase of 19 percent from the previous year), while U.S. prices averaged $298 MT (increasing 17 percent compared to CY 2021). Corn imports in Peru are subject to the Peruvian Price Band (PPB). This variable levy is triggered when commodity prices are low to protect domestic production. The bilateral Trade Promotion Agreement exempts U.S. corn imports from the PPB. Since international prices began to increase in 2020, the PPB has been reduced and eventually eliminated, giving Argentine corn an advantage over U.S. corn.
Also, Peru imports distiller dried grains with solubles (DDGS) to improve the quality of domestically produced animal feed. FAS Lima estimates Peru could be a 100,000 MT market for U.S. DDGS. However, currently, many producers remain reluctant to use new inputs and revamp their feed formulas.
Other sources: USDA
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