BMI View: Our outlook for Peru's agricultural sector remains positive. 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. The country is set to ben efit from cheaper food imports owing to the lower price of grains as well as the weakness in the Argentine peso, from where it imports a great deal of its grain. Grain production growth over the coming years will hampered by this dynamic.
|Agribusiness Market Value|
|BMI Market Value By Commodity (2011-2019)|
Poultry production growth to 2018/19: 19.7% to 1.5mn tonnes. Ongoing investment and the availability of cheaper imported feed will support growth in the sector.
Sugar consumption growth to 2019: 10 .7% to 1. 4 mn tonnes. Low sugar prices and the rapid expansion of the local confectionery and soft drinks sector will see demand for sugar expand in the coming years.
BMI universe agribusiness market value: USD12. 1 bn in 2015 (increase of 1.1% y-o-y on 2014; forecast to grow annually by 3.1% on average from 2014/15 to 2018/19).
2015 real GDP growth: 3. 8 % , up from 2.4% in 2014.
2015 consumer price index: 2.5 % year-on-year (y-o-y) average, down from 3.2% in 2014.
Depreciation of the Argentine peso over the coming years will benefit importers of Argentine agricultural products, particularly grain importers. Soybean hoarding by Argentine farmers will continue to increase and we expect an increase in grains hoarding over coming years. A depreciating Argentine peso will result in cheaper grain imports for key import markets, such as China and Latin American neighbours. Cheaper grains will also benefit the livestock industries in these countries, as cheaper feed costs could translate into higher profit margins and increased consumption.
We believe that dairy production in Peru will be one of the best performing agricultural sectors over the coming years. Having registered strong growth between 2007 and 2012, production declined considerably in 2012/13, by 12.2% y-o-y as a result of record feed prices. We believe that production grew in 2013/14 and will accelerate in 2014/15 and beyond. We forecast milk output growth of 2.6% y-o-y in 2014/15, to reach 2.0mn tonnes, as producers take advantage of low feed costs and positive economic growth prospects.
Sugar production will increase by just 1.6% y-o-y in 2015/16, a big deceleration on the last two years of growth, with increases of 6.5% y-o-y in 2013/14 and 6.1% in 2014/15. Sugar output growth will decline in 2015/16 due to the sharp decline in the global price of sugar, which has drastically reduced farmer's incomes and will subsequently limit sugarcane yields via less input usage.
We have revised up our cocoa production forecasts, and expect cocoa output to increase by 5.1% y-o-y in 2015/16, to 82,000 tonnes. Over our forecast period, we believe that cocoa output will rise by 26/9% on the 2013/14 level, to come in at 94,000 tonnes in 2018/19.