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Wheat is a minor crop in Peru, and production is concentrated mostly in the southern highlands. Wheat production is limited to mostly soft wheat, which is often consumed as purees or as a soup ingredient, and not good for milling. The wheat area harvested varies significantly from one year to the next depending on prices, farmers’ profit margin expectations, and the profitability of alternative crops such as quinoa, barley and oats.
According to the FAS, domestic millers have established a program promoting durum wheat cultivation for pasta production. They provide small farmers with seed and technical assistance, as well as purchasing production. Farmers are now producing around 12,000 tonnes of durum wheat for a pasta plant in Arequipa (approximately 1,000 kilometers south of Lima). Millers expect durum wheat production to reach 25,000 tonnes within the next few years.
Wheat consumption in market year 2017-18 is forecast at 2.1 million tonnes, remaining about the same as current levels. Overall wheat consumption is 64 kilograms per capita, a relatively low level compared to potato and rice consumption of 110 kilograms and 89 kilograms per capita, respectively. Wheat consumption is relatively constant, fluctuating slightly with the economy. Peru produces about 1.6 million tonnes of wheat flour per year. Of this amount 63% is used by the local baking industry, 20% goes to pasta manufacturing, 12% to the cookies and crackers sector, and 5% for small-scale, family use, the report said. Roughly 70% of domestic flour is sold through traditional markets, while only 30% of flour is sold in supermarkets.
The wheat milling industry is highly concentrated. Of the 23 domestic millers, the largest one alone accounts for over 60% of total wheat milled. According to the FAS, the country’s four largest millers are responsible for around 85% of the wheat milled in Peru.
Wheat imports in market year 2017-18 are forecast at 2 million tonnes. Wheat imports in 2016 were 1.6 million tonnes. Due to more competitive pricing, Canadian wheat held a 68% market share in 2016 followed by imports from the U.S. with 23% and Russia 9%. Argentine wheat imports into Peru were practically no-existent in 2016. U.S. and Canadian wheat exports to Peru have benefited from reduced imports from Argentina in recent years. With the agricultural policy changes occurring in Argentina to phase-out export taxes, it remains to be seen if it will regain market share in Peru, the report said.