Voluntary Report - public distribution

**Date:** 9/9/2004

**GAIN Report Number:** PE4014

PE4014

**Peru**

**Grain and Feed**

**Rice Update**

**2004**

**Approved by:**

![](media/image1.wmf)Melinda D. Sallyards

U.S. Embassy

**Prepared by:**

Gaspar E. Nolte

**Report Highlights:**

Rice production in CY 2004 is expected to fall 25 percent to 1.2 MMT.
This reduction is caused by the servere drought that is currently
affecting Peru. Rice imports for CY 2004 are now estimated at 80,000 MT.
While not as high as originally forecasted, still providing opportunity
for U.S. exporters to re-enter the market.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Lima \[PE1\]

\[PE\]

+----------------+------+------+------+------+------+------+--------+
| **PSD Table**  |      |      |      |      |      |      |        |
+----------------+------+------+------+------+------+------+--------+
| **Country**    | **Pe |      |      |      |      |      |        |
|                | ru** |      |      |      |      |      |        |
+----------------+------+------+------+------+------+------+--------+
| **Commodity**  | **R  |      |      |      | (    |      |        |
|                | ice, |      |      |      | 1000 |      |        |
|                | Mill |      |      |      | HA)( |      |        |
|                | ed** |      |      |      | 1000 |      |        |
|                |      |      |      |      | MT)  |      |        |
+----------------+------+------+------+------+------+------+--------+
|                | 2002 | Rev  | 2003 | Esti | 2004 | Fore | UOM    |
|                |      | ised |      | mate |      | cast |        |
+----------------+------+------+------+------+------+------+--------+
|                | USDA | Post | USDA | Post | USDA | Post |        |
|                | Offi | Esti | Offi | Esti | Offi | Esti |        |
|                | cial | mate | cial | mate | cial | mate |        |
|                | \[O  | \[N  | \[O  | \[N  | \[O  | \[N  |        |
|                | ld\] | ew\] | ld\] | ew\] | ld\] | ew\] |        |
+----------------+------+------+------+------+------+------+--------+
| # Mar          |      | 01/  |      | 01/  |      | 01/  | M      |
| ket Year Begin |      | 2003 |      | 2004 |      | 2005 | M/YYYY |
+----------------+------+------+------+------+------+------+--------+
| Area Harvested | 317  | 326  | 326  | 280  | 240  | 290  | (1000  |
|                |      |      |      |      |      |      | HA)    |
+----------------+------+------+------+------+------+------+--------+
| Beginning      | 243  | 98   | 222  | 77   | 429  | 5    | (1000  |
| Stocks         |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Milled         | 1482 | 1597 | 1597 | 1200 | 1150 | 1300 | (1000  |
| Production     |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Rough          | 2148 | 2314 | 2314 | 1739 | 1667 | 1884 | (1000  |
| Production     |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| MILLING RATE   | 6900 | 6900 | 6900 | 6900 | 6900 | 6900 | (1000  |
| (.9999)        |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| TOTAL Imports  | 32   | 15   | 150  | 80   | 100  | 70   | (1000  |
|                |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Jan-Dec        | 32   | 15   | 150  | 80   | 100  | 70   | (1000  |
| Imports        |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Jan-Dec Import | 22   | 1    | 0    | 15   | 0    | 15   | (1000  |
| U.S.           |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| TOTAL SUPPLY   | 1757 | 1710 | 1969 | 1357 | 1679 | 1375 | (1000  |
|                |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| TOTAL Exports  | 10   | 135  | 5    | 2    | 5    | 5    | (1000  |
|                |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Jan-Dec        | 10   | 135  | 5    | 2    | 5    | 5    | (1000  |
| Exports        |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| TOTAL Dom.     | 1525 | 1498 | 1535 | 1350 | 1545 | 1350 | (1000  |
| Consumption    |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Ending Stocks  | 222  | 77   | 429  | 5    | 129  | 20   | (1000  |
|                |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| TOTAL          | 1757 | 1710 | 1969 | 1357 | 1679 | 1375 | (1000  |
| DISTRIBUTION   |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+

# Summary {#summary-1}

Though the severe drought that is affecting Peru will result in less
rice production, the reduction will not be as dramatic as foreseen due
to planting in new areas. Post has revised rice production in CY 2004 to
1.2 MMT, a 25 percent reduction compared to CY 2003. The harvested area
for the 2004 crop was 280,000 hectares, 14 percent less than the
harvested area in CY 2003. The reduction in harvested area is the result
of two factors, less area planted, and the lack of water affecting the
crop when it was already on the ground.

Rice imports in CY 2004 are now estimated around 80,000 MT. As a result
of the government's efforts to overcome rice shortage, it encouraged
rice production in the oriental slopes of the Andes, especially in the
department of San Martin. Rice production in this area grew 35 percent.

Prices in San Martin have increased from \$132 to \$271 per metric ton.
Rice has become the most important economic activity in this area, there
is almost no land left idle. The average producer owns three hectares,
with production costs at about one thousand dollars per metric ton, and
yields around seven metric tons per hectare; a producer makes a profit
of \$2,700 in five months, which is a considerable amount taking into
consideration that minimum wage is \$140 monthly.

Rice production in the northern coastal region fell 85 percent in CY
2004 due to the drought. Since CY 2005 is forecast as another dry year,
a bumper rice crop is forecast in the San Martin area. The lack of rice
production in the northern coast has reduced smuggling of rice into
Ecuador CY 2004.

Peru's record imports were in 1996 when imported 430,000 MT. Uruguay and
the U.S. have usually shared the Peruvian rice market. Since 1997,
Peru's rice production began increasing rather rapidly causing imports
to fall as low as 15,000 MT in 2003. U.S. rice exports to Peru also
shrunk in the last six years to a point that they became almost
non-existent in 2003, leaving the market exclusively to Uruguay. Most
imported rice in Peru is targeted to the high-end market and sold packed
in one-kilogram bags. In this sector, U.S. rice has usually been very
competitive both in quality and price.

Imports for the last quarter of CY 2004 are estimated to increase
significantly, totaling about 80,000 MT for the year, of which about
15,000 MT should be U.S. Peru is forecast to import around 70,000 MT of
rice in CY 2005, which is a good opportunity for U.S. rice to recapture
its market