2012-02-01 14:29:58 - Peru Agribusiness Report Q1 2012 - a new market research report on companiesandmarkets.com

BMI View: Our positive outlook for the export market for Peruvian agribusiness is borne out by the announcement in early December 2011 by the Ministry of Agriculture that the country´s agricultural exports for the January-October period were up by 39.2% on the same period in 2010 to US$3.6bn. In volume terms, exports were up by 13.3%, with export revenues also supported by the increase in the price of coffee, avocado, paprika, evaporated milk and other goods. Coffee continues to account for the lion´s share of exports, at US$470.5mn, or 31.3% of the total. The US accounted for 25.0% of exports, with EU nations Germany, the Netherlands, Spain and Belgium also significant export destinations.Peruvian exporters received a further boost in the

 

 

final quarter of 2011 as the country completed free trade agreements with Central American nations Costa Rica, Guatemala and Panama. The Guatemalan trade deal will allow 95% of Peru´s exports tariff free access within five years, while the Costa Rican agreement is forecast to see the value of bilateral trade double or even triple from the current level of US$50mn, once it comes into force in 2012. Peruvian agricultural produce is expected to be among the main areas to benefit from liberalised market access. China is also an increasingly important trading partner and investor. While precious metals, oil and natural gas lead Peruvian exports, China is also an increasingly important market for Peruvian coffee, potatoes, asparagus, fruits and other agricultural produce.Key ForecastsBMI forecasts that Peru´s GDP will be among the strongest in Latin America over the medium term. We currently see GDP growth of 5.8% year-on-year (y-o-y) in 2012 and 4.8% in 2013, following on from an estimated 6.7% expansion in 2011.- Peru´s agricultural activity in October 2011 increased by 2.1% over the same period in 2010. The increase was driven primarily by growth in the livestock and dairy sectors (up by 4.4% y-o-y), including cattle, poultry, eggs and fresh milk.- We forecast strong coffee production in 2011/12, as good weather conditions have aided flowering and high prices have continued to encourage investment in plantations. We see production rising by 11.3% y-o-y to 4.45mn tonnes.- Demand for corn is forecast to increase by 3.2% y-o-y in 2012 to 3.44mn tonnes, driven by continued demand from the livestock sector. Around 1.6mn tonnes will be supplied through imports. Out to 2016, we see demand increasing by 20.1% on the 2011 level to 4.01mn tonnes.- Poultry production is forecast to increase by 4.2% y-o-y in 2011/12 to take production to 1.12mn tonnes. In recent years, production has been boosted by the increase in average prices paid to producers from PEN3.46/kg to PEN4.46/kg, in addition to strong domestic demand. Over our forecast period, we expect continued strong growth in poultry production and forecast output to reach 1.27mn tonnes in 2015/16, up 18.7% on the 2010/11 level.Key Trends And DevelopmentsOn December 11, Luis Ginocchio Balcázar was sworn in as the new agriculture minister, replacing Miguel Caillaux Zazzali who had served in the role since July 2011. The move came as part of a Cabinet re-shuffle following the sudden resignation of Peruvian Prime Minister Salomon Lerner and his replacement with Oscar Valdés, previously President Ollanta Humala´s interior minister. Ginocchio Balcázar is an agricultural exports consultant and a specialist in competitiveness, innovation, international trade and rural affairs. He has previously been a technical advisor for the Sustainable Rural Development Programme and was head of the Compensation Program for Competitiveness (PCC) as well as the Agricultural Technology Project Fund (INCAGRO). He has pledged to support entrepreneurship among Peru´s small- and medium-scale farmers to enable them to take advantage of international trade opportunities. He has also promised to support agricultural producers by improving coordination between regional, local and national levels of government.- Peruvian coffee exports are expected to reach US$1.3bn by the end of 2011, according to the National Coffee Chamber. In volume terms, exports are set to come in at 5.80mn quintals. Exports for the January-September period totalled US$914mn and 3.56mn quintals, a recordhigh for Peru. This represents a 72% y-o-y increase in value terms and a 16% y-o-y increase in volume terms over the corresponding period in 2010. However, despite record high exports, demand for organic coffee decreased, with many importers reluctant to pay the additional US$20-30 per quintal, according to the National Coffee Board. Record-breaking exports are not expected to continue into 2012; an increase in global coffee supply is expected to see prices fall and the difficult international economic climate may also impact the market. Furthermore, problems accessing finance for domestic producers, along with increasing input costs and erratic climatic conditions are also forecast to impact export potential.- In early November, the Peruvian Congress announced the approval of a bill to ban genetically modified organisms (GMOs) for a period of 10 years, in order to safeguard the country´s biodiversity. The bill will now be sent to President Humala, who has long stated his opposition to GMOs, to be signed into law. The measure prohibits GM seeds and livestock from being imported or produced locally, with the sole exception of GMOs for research purposes in a closed environment. The Peruvian Congress approved a similar bill in June 2011, but it was not ratified by the then president Alan García. According to Peru´s Ministry of Agriculture, the country is one of the world´s largest organic exporters, with the organic market worth some US$3bn annually and with some 40,000 certified organic farmers. The 10-year moratorium on GMOs was welcomed by the National Agrarian Convention, the country´s largest group representing producers.- On October 16, World Food Day, the Peruvian Ministry of Agriculture, along with other Peruvian ministries announced plans to promote Andean produce, such as amaranth, beans and moron, in order to combat the threat of an increase in international food prices. Grains such as corn, wheat and quinoa will also be promoted in a bid to combat the effects of increasing commodity prices.- In October, Peru looked set to secure addition to the EU´s list of preferred organic suppliers, with the final accreditation processes expected to be in place in 2012. The addition of Peru to the list will make access to lucrative EU markets easier and cheaper for Peruvian coffee, cocoa and bananas, among other products. Argentina and Costa Rica are already on the EU list of preferred organic suppliers.Click for report details: www.companiesandmarkets.com/Market/Agriculture%2c+Farming++Raw+M .. all Agriculture, Farming & Raw Materials Market Research Reports www.companiesandmarkets.com/Market/Agriculture%2c+Farming++Raw+M .. all Agriculture, Farming & Raw Materials Company Profile Reports www.companiesandmarkets.com/Market/Agriculture%2c+Farming++Raw+M .. all Latest Market Research Reports www.companiesandmarkets.com/Market/All/Market+Research?aCode=f3f .. 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