Reference Date: 06-September-2022

2022 paddy output forecast slightly above average due to good yields attained in first half of the year

Harvesting of thepaddy crop takes place throughout the year, with nearly half of its production concentrated during the May-July period. Paddy production in the third quarter of the year, when on average one-fifth of the annual production is harvested, is forecast to be near average in 2022 on the account of average sowings. According to satellite imagery, vegetation conditions are generally favourable in the key producing rain forecast (selva) and coastal areas. The paddy output gathered in the first half of 2022 is officially estimated to be 10 percent above the average. This is due to record-high yields attained as a result of favourable weather conditions. Reflecting this bumper harvest, the aggregate paddy production in 2022 is preliminarily forecast at 3.45 million tonnes, about 3 percent above the five‑year average.

Yellow maize for feed use is also harvested all year round and nearly 30 percent of the annual output is gathered in the July‑September period. Planted area to be harvested in the third quarter of 2022 is estimated at a slightly below-average level. The contraction in sowings, despite high maize prices and adequate soil moisture conditions, could be attributed to reduced availabilities of fertilizers, as imports in the first half of 2022 were more than 25 percent below the five‑year average of the same period last year. The 2022 production of yellow maize is forecast to be at an average level of 1.2 million tonnes, supported by the above‑average harvest in the first half of the year.

Regarding white maize for food use, harvesting was completed in August and production is anticipated at above-average level of 330 000 tonnes. While the planted area was near average, yields were excellent on account of favourable weather conditions in the major producing highlands.

Cereal import requirement forecast at slightly above‑average level in 2022

The wheat import requirement is forecast at a slightly above‑average level owing to the rising food demand, supported by the increasing population. Maize imports, which account for 60 percent of the total annual cereal imports, are also anticipated to be slightly above the average. This mainly reflects an acceleration of increase in poultry production in the first half of 2022, after a decline in production by about 3 percent in 2020. With the highest per capita consumption of chicken meat in Latin America, the demand for yellow maize by the domestic poultry sector has been generally increasing during the past ten years.

The cereal import requirement in the 2022 marketing year (January/December) is anticipated at a slightly above‑average level of 6.4 million tonnes.

Cereal prices well above year-earlier levels in July 2022

The annual food inflation rate in Lima metropolitan area recorded an increase of 10 percent in July 2022 , up from 3 percent in the same month in 2021. Wholesale prices of cereals rose since April 2022, reflecting rising production and transportation costs. Elevated international quotations exerted additional upward pressure on domestic prices. This was particularly the case for prices of wheat flour, due to high dependency on wheat imports to satisfy its domestic consumption needs as well as high processing costs. While prices of yellow maize and rice were 20 percent higher year on year in July 2022, prices of wheat flour were nearly 45 percent above those a year earlier.

The government introduced a series of measures to contain price increases and improve access to food. These include a temporary VAT exemption for chicken meat, eggs, pasta, bread and their inputs from May to July 2022 as well as a new food voucher programme “ Bono Alimentario .” The programme aims to deliver a one‑off payment of PEN 200‑300 (equivalent to about USD 50‑80) to 1.3 million vulnerable households (6.5 million people and about 17 percent of the total population) under the new budget of PEN 2 000 million(equivalent to about USD 520 million).

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