Peru Wheat: the US Offers Low Prices, Yet Low Exports
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Peru grows mainly soft Wheat which is not good for milling and primarily consumed locally in purees or as a soup ingredient. The total area harvested in MY 2022/2023 is forecast at 130,000 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 2022/2023 is expected at 1.7 MT/hectare.
Wheat production in MY 2022/2023 is forecast to remain at 220,000 MT. Wheat is a minor cash crop in Peru, concentrated in the southern highlands between 2,800 and 3,500 meters above sea level. It remains limited by complex and mountainous geography and rudimentary production practices. Domestic millers have an established social program to promote durum Wheat cultivation for pasta production. They provide small farmers with seed and technical assistance and guarantee the purchase of production. Farmers are now producing around 12,000 MT of durum Wheat for a pasta production plant in Arequipa.
Total Wheat consumption in MY 2022/2023 is forecast under 2.4 MMT. Overall, Wheat consumption is 66 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 Wheat milling industry is highly concentrated. The largest mill alone accounts for over 60 percent of total Wheat milled. The country’s four largest millers are responsible for around 85 percent of the Wheat milled in Peru. The country produces about 1.6 MMT of Wheat flour per year. 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.
Bread consumption is 35 kilograms per person, one of the lowest in South America. In comparison, per capita bread consumption is 75 kilograms in Argentina and 95 kilograms in Chile. Bread is typically purchased daily in bakeries and priced by unit instead of weight, which leads to a low-quality product. With pasta consumption at 12 kilograms per capita, Peru is South America’s second-largest consumer of pasta. Consumption is concentrated in the capital city of Lima, which accounts for half of all pasta consumed nationwide.
Peru’s Wheat Import
Wheat imports in MY 2022/2023 are forecast at 2.25 MMT. Wheat imports in CY 2021 were 2 MMT, a reduction of 12 percent compared to the previous year due to economic stress caused by the pandemic. According to the USDA, Canada dominated the Peruvian Wheat market in CY 2021 with a 77 percent market share, followed by the United States with 11 percent of market share – primarily soft Wheats. Canadian Wheat prices (CIF) averaged $290 per MT, an increase of 24 percent compared to the previous year, while U.S. Wheat prices averaged $272 per MT, increasing 19 percent compared to the previous year.
According to AgFlow data, Argentina led their Wheat import market with 0.8 MMT in 2021 – 2022, followed by Canada (0.6 MMT) and the United States (0.3 MMT). Peru imports Wheat duty-free from all sources. Although Peru does not explicitly promote Wheat production, the Government does have credit and technical assistance programs in place for all farmers. Most credits are granted through the Ministry of Agriculture’s agencies, such as Agro Rural and Agro Ideas or the Agricultural Bank.
Other sources: https://www.usda.gov
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