Required Report - public distribution

**Date:** 3/9/2006

**GAIN Report Number:** PE6002

PE6002

**Peru**

**Oilseeds and Products**

**Annual**

**2006**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Gaspar E. Nolte

**Report Highlights:**

Soybean meal imports in CY 2006 is forecast at 685,000 and oil imports
at 265,000 MT. Fishmeal production in CY 2006 is estimated at 1.95 MMT.
Total catch for reduction in CY 2005 was 8.81 MMT.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Lima \[PE1\]

\[PE\]

**Summary**

Soybean meal imports are forecast at 685,000 MT for CY 2006, about two
percent more than the previous year. Total soybean meal imports in CY
2005 were 670,560 MT. With 306,812 MT, Paraguay was the leading soybean
meal exporter to Peru in 2005 followed by Argentina with 290,818 MT and
Bolivia with 65,588 MT.

Soybean oil imports are forecast at 265,000 MT in CY 2006. Imports in CY
2005 were 263,000 MT.

######## The recently negotiated U.S.- Peru Trade Promotion Agreement will grant duty free entrance to U.S. soybeans, soybean meal and crude oil into Peru as soon as the agreement enters into force, which is estimated on January 1, 2007.

Total fish catch for reduction in CY 2006 is forecast at 8.6 MMT, a
slight increase from CY 2005. Fish meal production for Calendar Year
2006 is estimated in 1.95 MMT, a minor increase from the 1.91 MMT in
2005. Local fishmeal consumption is insignificant, only accounts for
three to five percent of total production, consumption for CY 2006 is
forecast at about 60,000 MT.

The GOP continues to enforce several measures to assure the
sustainability of the biomass. These measures include two fishing
seasons during each year. Other measures are fishing quotas, banning
fishing when fish size is less than 12 centimeters, size of the fishing
net, big enough to allow small fish through, establishment of a
protected area within five miles from shore, in which no industrial
fishing is allowed. The use jack mackarel or horse mackarel for fishmeal
is also prohibited.

Fish oil production for CY 2006 is forecast at 290,000 MT, an increase
of 4,000 MT compared to the previous year. Oil extraction is directly
related to water temperatures, so it can vary significantly from year to
year.

+----------------+------+------+------+------+------+------+------+
| ##             |      |      |      |      |      |      |      |
| #### PSD Table |      |      |      |      |      |      |      |
+----------------+------+------+------+------+------+------+------+
| **Country**    | **Pe |      |      |      |      |      |      |
|                | ru** |      |      |      |      |      |      |
+----------------+------+------+------+------+------+------+------+
| **Commodity**  | **M  |      |      |      | (    |      |      |
|                | eal, |      |      |      | 1000 |      |      |
|                | S    |      |      |      | MT)( |      |      |
|                | oybe |      |      |      | PERC |      |      |
|                | an** |      |      |      | ENT) |      |      |
+----------------+------+------+------+------+------+------+------+
|                | 2004 | Rev  | 2005 | Esti | 2006 | Fore | UOM  |
|                |      | ised |      | mate |      | cast |      |
+----------------+------+------+------+------+------+------+------+
|                | USDA | Post | USDA | Post | USDA | Post |      |
|                | Offi | Est  | Offi | Est  | Offi | Est  |      |
|                | cial | imat | cial | imat | cial | imat |      |
|                | \[O  | e\[N | \[O  | e\[N | \[O  | e\[N |      |
|                | ld\] | ew\] | ld\] | ew\] | ld\] | ew\] |      |
+----------------+------+------+------+------+------+------+------+
| **Market Year  |      | 01/  |      | 01/  |      | 01/  | MM/  |
| Begin**        |      | 2005 |      | 2006 |      | 2007 | YYYY |
+----------------+------+------+------+------+------+------+------+
| Crush          | 2    | 0    | 2    | 0    | 0    | 0    | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Extr. Rate,    | 0.5  | 0    | 0.5  | 0    | 0    | 0    | (    |
| 999.9999       |      |      |      |      |      |      | PERC |
|                |      |      |      |      |      |      | ENT) |
+----------------+------+------+------+------+------+------+------+
| Beginning      | 10   | 22   | 10   | 30   | 10   | 20   | (    |
| Stocks         |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Production     | 1    | 0    | 1    | 0    | 0    | 0    | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imports     | 653  | 670  | 670  | 685  | 0    | 700  | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imp. from   | 0    | 7    | 0    | 10   | 0    | 25   | (    |
| U.S.           |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imp. from   | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| the EC         |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL SUPPLY   | 664  | 692  | 681  | 715  | 10   | 720  | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Exports     | 0    | 0    | 0    | 0    | 0    | 0    | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Exp. to the | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| EC             |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Industrial     | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Dom. Consum    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Food Use Dom.  | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Consump.       |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Feed Waste     | 654  | 662  | 671  | 695  | 0    | 705  | (    |
| Dom. Consum    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL Dom.     | 654  | 662  | 671  | 695  | 0    | 705  | (    |
| Consumption    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Ending Stocks  | 10   | 30   | 10   | 20   | 0    | 15   | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL          | 664  | 692  | 681  | 715  | 0    | 720  | (    |
| DISTRIBUTION   |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Year  | 0    | 581  | 0    | 670  | 0    | 685  | (    |
| Imports        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Yr    | 0    | 48   | 0    | 7    | 0    | 10   | (    |
| Imp. U.S.      |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Year  | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Exports        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Yr    | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Exp. to U.S.   |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+

+--------------------------------+-------------------------------------+
| **Import Trade Matrix**        |                                     |
+--------------------------------+-------------------------------------+
| **Country**                    | ####### Peru                        |
+--------------------------------+-------------------------------------+
| **Commodity**                  | Oilseed, Soybean                    |
+--------------------------------+-------------------------------------+
| Time Period                    | CY 2005                             |
+--------------------------------+-------------------------------------+
| Imports from:                  |                                     |
+--------------------------------+-------------------------------------+
| U.S.                           | 7,341                               |
+--------------------------------+-------------------------------------+
| Others                         |                                     |
+--------------------------------+-------------------------------------+
| Paraguay                       | 306,812                             |
+--------------------------------+-------------------------------------+
| Argentina                      | 290,818                             |
+--------------------------------+-------------------------------------+
| Bolivia                        | 65,588                              |
+--------------------------------+-------------------------------------+
|                                |                                     |
+--------------------------------+-------------------------------------+
| Total for Others               | 663,218                             |
+--------------------------------+-------------------------------------+
| Others not Listed              | 1                                   |
+--------------------------------+-------------------------------------+
| Grand Total                    | 670,560                             |
+--------------------------------+-------------------------------------+

Units: Metric Tons

**Soybean meal**

**Outlook**

Soybean meal imports are forecast at 685,000 MT for CY 2006, about two
percent more than the previous year. Increasing demand from the poultry
sector and high prices of fishmeal will continue driving demand for
imported soybean meal, which is directly affected by fishmeal production
and prices.

With a per capita consumption of about 24 kilograms per annum, chicken
meat is a staple product in the Peruvian diet and the second cheapest
source protein after fish. Peru's poultry population is about 320
million birds per year and the main user of soybean meal, which
constitutes about 12 percent of the broiler's feed. Poultry production
is expected to grow between two and three percent in CY 2006.

Poultry prices fell significantly during the first semester of CY 2005
due to excess demand. Since a large poultry operation began exporting
chicken meat to Asia, some producers expected a shortage in the local
market and increased its bird population up to 40 percent, which brought
total bird population to about 30 million birds per month. As a result
prices fell to around 36 percent under the cost of production. Poultry
production went back to normal during the second semester of 2005 and
prices recovered but not without an important financial set back in the
sector.

Total soybean imports in CY 2005 were 670,560 MT. With 306,812 MT,
Paraguay was the leading soybean meal exporter to Peru in 2005 followed
by Argentina with 290,818 MT and Bolivia with 65,588 MT. The U.S. only
exported 7, 341 MT, a significant decrease compared to the almost 48,000
MT exported in CY 2004 due to more availability from competitors.

######## U.S.-Peru Trade Promotion Act

*The recently negotiated U.S.- Peru Trade Promotion Agreement will grant
duty free entrance to U.S. soybeans and soybean meal into Peru as soon
as the agreement enters into force, which is estimated on January 1,
2007.*

Current Peru soybean imports fro the U.S. are almost non- existent.
Soybean imports are assessed 4 percent duty. Peru grants 40 percent
tariff preference to Argentina and Brazil and duty free entrance to
Bolivian beans. Soybean meal imports are assessed 4 percent import duty.
Peru grants 100 percent tariff reduction for Bolivian meal, 70 percent
reduction for Paraguayan meal and 35 percent for Argentine meal.

######## Biotechnology

Overall Peru maintains a positive attitude towards biotechnology. In
fact, the GOP has drafted a new law to promote and regulate the use of
biotechnology. In the last year, GOP officials have attended
international forums on biotechnology and raised their voice in favor of
its use as a tool to develop the agricultural sector and reduce
production costs for producers.

+----------------+------+------+------+------+------+------+------+
| ##             |      |      |      |      |      |      |      |
| #### PSD Table |      |      |      |      |      |      |      |
+----------------+------+------+------+------+------+------+------+
| **Country**    | **Pe |      |      |      |      |      |      |
|                | ru** |      |      |      |      |      |      |
+----------------+------+------+------+------+------+------+------+
| **Commodity**  | **   |      |      |      | (    |      |      |
|                | Oil, |      |      |      | 1000 |      |      |
|                | S    |      |      |      | MT)( |      |      |
|                | oybe |      |      |      | PERC |      |      |
|                | an** |      |      |      | ENT) |      |      |
+----------------+------+------+------+------+------+------+------+
|                | 2004 | Rev  | 2005 | Esti | 2006 | Fore | UOM  |
|                |      | ised |      | mate |      | cast |      |
+----------------+------+------+------+------+------+------+------+
|                | USDA | Post | USDA | Post | USDA | Post |      |
|                | Offi | Est  | Offi | Est  | Offi | Est  |      |
|                | cial | imat | cial | imat | cial | imat |      |
|                | \[O  | e\[N | \[O  | e\[N | \[O  | e\[N |      |
|                | ld\] | ew\] | ld\] | ew\] | ld\] | ew\] |      |
+----------------+------+------+------+------+------+------+------+
| **Market Year  |      | 01/  |      | 01/  |      | 01/  | MM/  |
| Begin**        |      | 2005 |      | 2006 |      | 2007 | YYYY |
+----------------+------+------+------+------+------+------+------+
| Crush          | 2    | 0    | 2    | 0    | 0    | 0    | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Extr. Rate,    | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| 999.9999       |      |      |      |      |      |      | PERC |
|                |      |      |      |      |      |      | ENT) |
+----------------+------+------+------+------+------+------+------+
| Beginning      | 10   | 17   | 10   | 16   | 10   | 16   | (    |
| Stocks         |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Production     | 0    | 0    | 0    | 0    | 0    | 0    | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imports     | 265  | 263  | 278  | 265  | 0    | 268  | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imp. from   | 40   | 11   | 0    | 15   | 0    | 15   | (    |
| U.S.           |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imp. from   | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| the EC         |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL SUPPLY   | 275  | 280  | 288  | 281  | 10   | 284  | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Exports     | 0    | 0    | 0    | 0    | 0    | 0    | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Exp. to the | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| EC             |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Industrial     | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Dom. Consum    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Food Use Dom.  | 265  | 264  | 278  | 265  | 0    | 266  | (    |
| Consump.       |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Feed Waste     | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Dom. Consum    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL Dom.     | 265  | 264  | 278  | 265  | 0    | 266  | (    |
| Consumption    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Ending Stocks  | 10   | 16   | 10   | 16   | 0    | 18   | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL          | 275  | 280  | 288  | 281  | 0    | 284  | (    |
| DISTRIBUTION   |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Year  | 0    | 230  | 0    | 263  | 0    | 265  | (    |
| Imports        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Yr    | 0    | 29   | 0    | 11   | 0    | 15   | (    |
| Imp. U.S.      |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Year  | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Exports        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calndr Yr Exp. | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| to U.S.        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+

  ------------------------------------- ---------------------------------
  **Import Trade Matrix**               

  **Country**                           Peru

  **Commodity**                         Oil, Soybean

  Time Period                           CY 2005

  Imports from:                         

  U.S.                                  11,401

  Others                                

  Argentina                             227,718

  Bolivia                               15,778

  Brazil                                6,696

                                        

  Total for Others                      250,192

  Others not Listed                     1,325

  Grand Total                           262,918
  ------------------------------------- ---------------------------------

Units: Metric Tons

**Soybean oil**

**Outlook**

Soybean oil imports are forecast at 265,000 MT in CY 2006. Imports in CY
2005 were 263,000 MT. Soy oil consumption in CY 2005 was 264,000 MT, six
percent higher than in CY 2004. Peru does not produce any soybeans, so
there is no crushing for oil. The only crushing capacity is to produce
full fat soy meal for feed.

######## U.S.-Peru Trade Promotion Act

*Crude soybean oil imports are assessed four percent duty and processed
soy oil imports are assessed 12 percent. Peru has several bilateral
trade agreements for crude soybean oil. Imports from Bolivia are duty
free, while imports from Paraguay are granted 90 percent tariff
reduction. Soybean oil from Argentina has 80 percent tariff reduction.
The U.S.-Peru Trade Promotion Act will grant duty free entrance to U.S.
soy oil as soon as the agreement enters into force, which is estimated
on January 1, 2007.*

+----------------+------+------+------+------+------+------+------+
| ##             |      |      |      |      |      |      |      |
| #### PSD Table |      |      |      |      |      |      |      |
+----------------+------+------+------+------+------+------+------+
| **Country**    | **Pe |      |      |      |      |      |      |
|                | ru** |      |      |      |      |      |      |
+----------------+------+------+------+------+------+------+------+
| **Commodity**  | **M  |      |      |      | (    |      |      |
|                | eal, |      |      |      | 1000 |      |      |
|                | Fi   |      |      |      | MT)( |      |      |
|                | sh** |      |      |      | PERC |      |      |
|                |      |      |      |      | ENT) |      |      |
+----------------+------+------+------+------+------+------+------+
|                | 2004 | Rev  | 2005 | Esti | 2006 | Fore | UOM  |
|                |      | ised |      | mate |      | cast |      |
+----------------+------+------+------+------+------+------+------+
|                | USDA | Post | USDA | Post | USDA | Post |      |
|                | Offi | Est  | Offi | Est  | Offi | Est  |      |
|                | cial | imat | cial | imat | cial | imat |      |
|                | \[O  | e\[N | \[O  | e\[N | \[O  | e\[N |      |
|                | ld\] | ew\] | ld\] | ew\] | ld\] | ew\] |      |
+----------------+------+------+------+------+------+------+------+
| **Market Year  |      | 01/  |      | 01/  |      | 01/  | MM/  |
| Begin**        |      | 2005 |      | 2006 |      | 2007 | YYYY |
+----------------+------+------+------+------+------+------+------+
| Catch For      | 8900 | 8810 | 9015 | 8531 | 0    | 8600 | (    |
| Reduction      |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Extr. Rate,    | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| 999.9999       | .224 | .217 | .224 | .228 |      | .226 | PERC |
|                | 1573 | 8206 | 0709 | 5781 |      | 7441 | ENT) |
+----------------+------+------+------+------+------+------+------+
| Beginning      | 25   | 318  | 25   | 171  | 25   | 61   | (    |
| Stocks         |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Production     | 1995 | 1919 | 2020 | 1950 | 0    | 1950 | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imports     | 0    | 0    | 0    | 0    | 0    | 0    | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imp. from   | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| U.S.           |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imp. from   | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| the EC         |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL SUPPLY   | 2020 | 2237 | 2045 | 2121 | 25   | 2011 | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Exports     | 1950 | 2001 | 1975 | 2000 | 0    | 1900 | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Exp. to the | 0    | 362  | 0    | 500  | 0    | 0    | (    |
| EC             |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Industrial     | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Dom. Consum    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Food Use Dom.  | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Consump.       |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Feed Waste     | 45   | 65   | 45   | 60   | 0    | 60   | (    |
| Dom. Consum    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL Dom.     | 45   | 65   | 45   | 60   | 0    | 60   | (    |
| Consumption    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Ending Stocks  | 25   | 171  | 25   | 61   | 0    | 51   | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL          | 2020 | 2237 | 2045 | 2121 | 0    | 2011 | (    |
| DISTRIBUTION   |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Year  | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Imports        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Yr    | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Imp. U.S.      |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Year  | 1315 | 1971 | 0    | 2001 | 0    | 2000 | (    |
| Exports        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calndr Yr Exp. | 0    | 43   | 0    | 11   | 0    | 20   | (    |
| to U.S.        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+

  ------------------------------ ----------------------------------------
  **Export Trade Matrix**        

  **Country**                    Peru

  **Commodity**                  Meal, Fish

  Time Period                    CY 2005

  Exports for:                   

  U.S.                           11,349

  Others                         

  China                          1,049,412

  Germany                        235,871

  Japan                          170,123

  Taiwan                         84,398

  Spain                          42,624

  Indonesia                      39,069

  Canada                         35,704

  Turkey                         35,347

  France                         24,686

  UK                             22,142

  Total for Others               1,739,376

  Others not Listed              250,357

  Grand Total                    2,001,082
  ------------------------------ ----------------------------------------

Units: Metric Tons

**Fishmeal**

**Production**

Fishmeal production for Calendar Year 2006 is estimated in 1.95 MMT, a
slight increase from the 1.91 MMT in 2005. Total fish catch for
reduction in CY 2006 is forecast at 8.6 MMT, a slight increase from CY
2005. Almost 92 percent of Peru's total fish catch is used to produce
fishmeal and oil, and only 8 percent for human consumption.

Peru produces two types of fishmeal. Fair Average Quality (FAQ), with a
protein content between 62 and 65 percent, which is dried by direct
fire; and Prime, which is indirectly dried by steam and has a protein
content of 66-67 percent. Fishmeal prices range from \$480 per MT for
FAQ fishmeal to \$600 per MT for prime fishmeal.

![](media/image2.wmf)

The Peruvian fishing industry continues struggling with the financial
crisis originated by the 1997/1998 El Niño weather phenomenon which
drove the fish away from the Peruvian coasts and halted all industrial
fishing activity for 18 months. Additionally, the strong devaluation of
Asian currencies in 1999, main markets for Peruvian fishmeal, brought a
sound industry almost to bankruptcy. Currently, the total industry debt
is estimated at \$1.15 billion, of which about \$150 million are paid
annually. The three largest companies account for about 25 percent of
the debt.

There are 90 fishmeal plants currently working in Peru, of a total of
110 plants. The Peruvian fishing fleet is comprised of 984 boats, 684
steel boats with storage capacity over 500 cubic meters and 300 wooden
boats with storage capacity of 110 cubic meters. Total processing
capacity is 7,500 MT per hour, about four times more than they are allow
to catch.

Enforcement of environmental regulation has pushed processing plants to
invest on better and more efficient equipment. Most of plants now have
"tail-water" discharge recovery and airborne particle recovery systems,
both of which translate into higher extraction rates. Plants are also
forced to pump residual water at least 13 kilometers and 50 meters deep.
Larger producers continue investing in canning or freezing lines, to
convert more of the catch to higher valued products for human
consumption, a trend expected to continue.

Consumption

Local fishmeal consumption is insignificant, only accounts for three to
five percent of total production and does not have a great impact on the
export market. Consumption for CY 2006 is forecast at about 60,000 MT.
Local consumption is expected to increase somewhat in the upcoming years
due to an increase demand from the aquaculture industry, but it will
still not have a significant impact on fishmeal exports or price.

Trade

Fishmeal exports for CY 2006 are forecast at 2 MMT. With 1.049 MMT,
China continued to be the major Peruvian fishmeal importer in CY 2005,
followed by Germany (235,871 MT), Japan (170,123 MT) and Taiwan (84,398
MT).

Average fishmeal prices were steady during the first semester of CY
2005, but increased sharply during the last semester, particularly in
the last quarter, reaching \$670 per MT in December due to lack of
production as a result of a fishing ban.

Total fisheries exports were \$1.6 billion in CY 2005, a 14 percent
increase compared to the previous year. Fishmeal exports in CY 2005 were
\$1.15 billion, almost 21 percent more than the previous year. What
Peruvians call direct consumption products, as opposed to indirect
consumption vis a vis fishmeal, are expected to increase significantly
in the upcoming years. Frozen fish exports were \$262 million in CY
2005, increasing 20 percent from the previous year.

![](media/image3.wmf)

Policy

The GOP is concerned about the sustainable limits of fish catches, and
sets limits for the processing capacity of plants and the fishing
capacity of fleets. Every processing plant and fishing vessel must apply
for an operating permit, and receive a quota, from the Ministry of
Fisheries, before it can begin operations each season. Moreover, the
government is no longer issuing permits to build new plants nor boats.
The only venue to acquire a fishing boat is to buy one that already has
a fishing permit.

The GOP continues to enforce several measures to assure the
sustainability of the biomass. These measures include two fishing
seasons during each year. These seasonal fishing bans are implemented
during the anchovy spawning seasons and may vary somewhat from year to
year. Usually the bans are enforced from January to mid March and from
August to mid October. Other measures are:

-   Fishing quota, which is usually around 8.5 MMT.

-   Measurement of the fish size, fishing is not allowed if the size of
    the fish is less than 12 centimeters.

-   Size of the fishing net, big enough to allow small fish through.

-   Establishment of a protected area, five miles from shore, in which
    no industrial fishing is allowed.

-   The GOP has also prohibits the use jack mackarel or horse mackarel
    for fishmeal, only anchovy is allowed for industrial processing with
    a maximum of 11 percent of incidental fishing (species other than
    anchovy).

The GOP enforces these measures through satellite screening and
inspection. SGS was awarded a \$7 million contract to inspect 150
unloading points along the coast during the fishing seasons.

+----------------+------+------+------+------+------+------+------+
| ##             |      |      |      |      |      |      |      |
| #### PSD Table |      |      |      |      |      |      |      |
+----------------+------+------+------+------+------+------+------+
| **Country**    | **Pe |      |      |      |      |      |      |
|                | ru** |      |      |      |      |      |      |
+----------------+------+------+------+------+------+------+------+
| **Commodity**  | **   |      |      |      | (    |      |      |
|                | Oil, |      |      |      | 1000 |      |      |
|                | Fi   |      |      |      | MT)( |      |      |
|                | sh** |      |      |      | PERC |      |      |
|                |      |      |      |      | ENT) |      |      |
+----------------+------+------+------+------+------+------+------+
|                | 2004 | Rev  | 2005 | Esti | 2006 | Fore | UOM  |
|                |      | ised |      | mate |      | cast |      |
+----------------+------+------+------+------+------+------+------+
|                | USDA | Post | USDA | Post | USDA | Post |      |
|                | Offi | Est  | Offi | Est  | Offi | Est  |      |
|                | cial | imat | cial | imat | cial | imat |      |
|                | \[O  | e\[N | \[O  | e\[N | \[O  | e\[N |      |
|                | ld\] | ew\] | ld\] | ew\] | ld\] | ew\] |      |
+----------------+------+------+------+------+------+------+------+
| **Market Year  |      | 01/  |      | 01/  |      | 01/  | MM/  |
| Begin**        |      | 2005 |      | 2006 |      | 2007 | YYYY |
+----------------+------+------+------+------+------+------+------+
| Catch For      | 8900 | 8810 | 9015 | 8531 | 0    | 8600 | (    |
| Reduction      |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Extr. Rate,    | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| 999.9999       |      | .032 |      | .033 |      | .034 | PERC |
|                |      | 4631 |      | 9936 |      | 3023 | ENT) |
+----------------+------+------+------+------+------+------+------+
| Beginning      | 0    | 3    | 0    | 1    | 0    | 1    | (    |
| Stocks         |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Production     | 0    | 286  | 0    | 290  | 0    | 295  | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imports     | 0    | 0    | 0    | 0    | 0    | 0    | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imp. from   | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| U.S.           |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Imp. from   | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| the EC         |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL SUPPLY   | 0    | 289  | 0    | 291  | 0    | 296  | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Exports     | 0    | 268  | 0    | 265  | 0    | 267  | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| MY Exp. to the | 0    | 169  | 0    | 175  | 0    | 180  | (    |
| EC             |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Industrial     | 0    | 3    | 0    | 3    | 0    | 2    | (    |
| Dom. Consum    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Food Use Dom.  | 0    | 2    | 0    | 2    | 0    | 2    | (    |
| Consump.       |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Feed Waste     | 0    | 15   | 0    | 20   | 0    | 25   | (    |
| Dom. Consum    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL Dom.     | 0    | 20   | 0    | 25   | 0    | 29   | (    |
| Consumption    |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Ending Stocks  | 0    | 1    | 0    | 1    | 0    | 0    | (    |
|                |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| TOTAL          | 0    | 289  | 0    | 291  | 0    | 296  | (    |
| DISTRIBUTION   |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Year  | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Imports        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Yr    | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Imp. U.S.      |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calendar Year  | 0    | 350  | 0    | 268  | 0    | 265  | (    |
| Exports        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+
| Calndr Yr Exp. | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| to U.S.        |      |      |      |      |      |      | 1000 |
|                |      |      |      |      |      |      | MT)  |
+----------------+------+------+------+------+------+------+------+

  --------------------------------- -------------------------------------
  **Export Trade Matrix**           

  **Country**                       Peru

  **Commodity**                     Oil, Fish

  Time Period                       CY 2005

  Exports for:                      

  U.S.                              0

  Others                            

  Belgium                           94,237

  Denmark                           47,402

  Chile                             44,994

  Canada                            23,493

  Japan                             12,499

  Italy                             10,104

                                    

  Total for Others                  232,729

  Others not Listed                 35,515

  Grand Total                       268,244
  --------------------------------- -------------------------------------

Units: Metric Tons

**Fish Oil**

**Outlook**

Fish oil production for CY 2006 is forecast at 290,000 MT, a slight
increase compared to the previous year. Oil extraction is directly
related to water temperatures so it can vary significantly from year to
year. Under normal weather conditions the oil extraction rate should be
around 8 to 10 percent, but it drop as low as one percent.

Exports for CY 2006 are forecast at 265,000 MT. Oil production and
exports are difficult to forecast due to the high variability in fish
oil content and the lack of official statistics. Belgium, Denmark and
Chile were the most important importers of Peru's fish oil with 26
percent, 18 percent and 16 percent of the total exports respectively.

Consumption in CY 2005 is forecast at 56,000 MT, 22 percent lower than
CY 2004. This decrease in local consumption is the result of an
increasing fish oil demand in other countries, especially Chile, for
their salmon industry. Post foresees this trend continuing in the
upcoming years.