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New Market Study Published: Peru Agribusiness Report Q1 2014

New Food research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 01/07/2014 -- Our outlook for Peru's agricultural sector remains positive. The livestock sector is very dynamic, and investment into the country's ethanol sector is boosting sugar production. Export crops, such as coffee and cocoa, are hampered by a lack of infrastructure and investment, but there is scope for strong growth in both, particularly as Peru is becoming increasingly recognised for organic and speciality crops. We caution that a lack of profitability threatens to weaken the dairy sector; this could be further exacerbated by the forthcoming entry into force of the free trade agreement with the EU.

Key Forecasts

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- Poultry production growth to 2016/17: 19.8% to 1.4mn tonnes. Ongoing investment and the availability of cheaper imported feed will support growth in the sector.
- Sugar production growth to 2016/17: 30.2% to 1.4mn tonnes. The rapid expansion of the ethanol sector will see increasing investment in sugar cane.
- BMI universe agribusiness market value: US$12.9bn in 2014 (up from US$12.8bn in 2013; forecast to grow annually by 1.8% on average to 2017).
- 2014 real GDP growth: 4.9% (up from 4.8% in 2013; forecast to grow annually by 5.0% on average between 2012 and 2017).
- 2014 consumer price index: 2.9% y-o-y (up from 2.8% in 2013; forecast to grow annually by 2.9% on average between 2012 and 2017).
- 2013 central bank policy rate: 4.00% (down from 4.25% in 2012; forecast to average 2.9% over the rest of our forecast period).

Industry Developments

We maintain our forecast for Peru's sugar production to increase 5% y-o-y to 1.22mn tonnes in 2013/14, a result of yield improvements and new processing capacity. The average sugar yield in 2012/13 was 128 tonnes per hectare (ha), up 4% y-o-y. Total harvested area in 2012/13 was 81,149ha. For 2013/14, local industry sources are indicating that sugar yields could be as high as 190 tonnes/ha in some regions, which could push up the average and support production growth. Moreover, weather conditions have reportedly been favourable during plantings, with sufficient water supply and investments in new plantations.

Falling production in West Africa, as well as growing prospects for consumer markets in Eastern Europe, India, China and Russia, have opened a window of opportunity for alternative producers such as Peru. The country's government supported cooperation between international agencies such as GTZ from Germany and USAID and local producer associations such as Asociacion Peruana de Productores de Cacao. The aim of the cooperation has been to identify quality beans from various cacao-growing areas, to homogenize and improve production processes, especially post-harvest stages when the fruit's aroma and taste develops. Peru is also working to increase yields in the sector. Finally, as for coffee, the country is trying to position more of its production as organic, in order to meet increasing world demand.

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