Abstract
In BMI' s Peru Agribusiness Report for Q3 2009 we introduce the new Livestock
Outlook. Peru' s beef
production is small by Latin American standards.
Domestic production of 163,339 tonnes in 2008 was
only around 50% of that
in Venezuela and less than a fifth of the amount of beef produced in
Colombia.
Even Andean neighbour Ecuador, which has a population less than
half the size of Peru' s and a lower
GDP per capita, produces more beef.
Consumption is also tiny by beef-loving Latin American standards.
In 2008,
per capita beef consumption stood at around 6kg. This compares to 13kg in
Colombia, 32kg in
Paraguay and almost 70kg in Argentina.
Despite these
low figures, the beef sector has been growing strongly this decade as Peru' s
economy has
boomed. From 2000 to 2007, beef production rose 25.4% while
consumption increased 20.9%. We expect
growth to slow in 2009 as the
economy feels the effect of the world economic slowdown. Beyond this
year,
however, we expect both consumption and production growth to continue as
Peruvian consumers
are able to afford to spend more on food.
Far more
significant to the Peruvian diet is chicken. Poultry production has seen rapid
growth this decade,
expanding by more than 60% from 2000 to 2007. In 2008,
consumers were hit by a rapid rise in the price
of chicken as producers
passed higher feed costs onto consumers and increased demand drove up the
price. With spending on chicken making up 10% of the country' s total food
expenditure, the price of
chicken is closely tracked by the authorities.
With the slowdown in GDP growth to a forecast 3.2% this
year from 9.8% in
2008, the price of chicken has fallen back since the end of last year. We
expect demand
for chicken, the most affordable meat, to remain strong
despite the economic troubles faced by the
country.
Dominating the
political agenda in Peru at the end of the second quarter of 2009 was the
fatal clashes
between police and indigenous protesters in the Amazonian
province of Bagua. While the protests were
spurred by the expansion of oil
and gas exploration into indigenous lands in the Amazon, the unrest will
have repercussions for the country' s agricultural sector.
Rapid economic
growth will see demand for agricultural products in Peru rise. The development
of a
biofuels sector will also see demand for land increase. The free
trade agreement with the US which came
into force in February this year
will give added impetus to the development of more modern, efficient and
large-scale agricultural concerns. New agricultural developments are bound to
come into conflict with
existing systems of land use among Peru' s
still-poor rural population. The recent violence has shown that
local
concerns will have to be taken seriously as the agricultural frontier expands
if production is not to be
disrupted.
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