Boston, MA -- (ReleaseWire) -- 05/02/2014 -- 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 entry into force of the free trade agreement with the EU.
- Poultry production growth to 2017/18: 18.0% to 1.44mn tonnes. Ongoing investment and the availability of cheaper imported feed will support growth in the sector.
- Sugar production growth to 2017/18: 26.3% to 1.5mn tonnes. The rapid expansion of the ethanol sector will see increasing investment in sugar cane.
- BMI universe agribusiness market value: US$11.1bn in 2014 (stable from US$11.1bn in 2013; forecast to grow annually by 6.8% on average to 2018).
- 2014 real GDP growth: 5.1% (up from 4.8% in 2013; forecast to grow annually by 5.1% on average between 2013 and 2018).
- 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 2013 and 2018).
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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.
We forecast cocoa production in Peru to continue increasing steadily in 2013/14 and forecast output to reach 74,100 tonnes that season and 88,400 tonnes by 2017/18. Expansion in area planted with cocoa trees by 30,000 hectares (adding to the already existing 144,000 ha planted), combined with improvements in yields (now at 60kg/ha) have boosted production growth in recent years. We see much potential for growth based on further investment in area and yields, the latter being particularly low by global standards and therefore having tremendous room for improvement in the near term. In fact, cocoa yields in West Africa are around 477kg/ha, with the most efficient farms experiencing yields around 1,500kg/ha.
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