Ecuador to Reduce Corn Planting Area
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Ecuador’s Corn production in MY 2022/23 (May-April) is forecast at 1.4 million tons, according to the USDA. This forecast is based on an additional 70,000 planted hectares and a reduction of yield to 4.3 tons per hectare, 23 percent lower than last year due to reduced use of fertilizers in response to much higher prices. In some farms, mechanization and the use of advanced technology have been implemented. Still, Corn is produced mainly by small and semi-subsistence farmers with less than five hectares and who are now hesitant to plant due to uncertainty about Government Corn policies that currently just determine the official price. There is a trend of small Corn growers retiring or switching to other crops, such as cacao, pitahaya, or cattle. This production share is now filled by medium size producers of up to 50 hectares each.
The Ministry of Agriculture (MAG)’s resources are now focused on supporting small and semi-subsistence farmers in general. The current Minister of Agriculture publicly mentioned his interest in reducing the planted area of Corn due to high production costs and yields below international standards. However, MAG still maintains trade policies that limit Corn imports, resulting in slowed approvals for import licenses.
Ecuadorian Corn consumers continue to pay significantly higher prices for domestically produced Corn. As of March 3, 2022, MAG has not set the official Corn price for 2022. However, based on information provided by MAG’s Undersecretary of Commercialization, the official price will be higher than the 2021 price of $14.60 per hundred-pound bag ($321.78 per ton). This forced many in the agro-industrial sector to turn to substitutes, mainly wheat, even though the international price of this grain increased during 2021.
Corn consumption in Ecuador is forecast at nearly 1.7 million tons in MY 2022/23. These estimates are based on an expected rebound in pork and poultry production after declines in MY 2020/21. However, Ecuador’s agro-industrial sector continues to change consumption patterns by increasing the use of Corn substitutes that are easier to import. In addition, the increased use of wheat and the experimentation with sorghum and other grains, such as rice and rice byproducts, could cause a reduction in consumption in future years.
Trade sources report that animal feed producers are increasingly using those Corn alternatives that are available domestically, as well as imported distillers’ dried grains with soluble (DDGS), which is now widely used in the shrimp industry. As per local sources, 85-90 percent of Corn is utilized by the national poultry industry and 10-15 percent for other livestock production, primarily swine. Ecuador’s yellow Corn consumption depends on the demand for animal feed and the availability of lower-priced Corn substitutes.
Ecuador’s Corn Trade
Despite the shift to alternatives, Ecuador’s Corn imports in MY 2022/23 are forecast to reach 250,000 tons. To meet demand and to reduce hoarding and subsequent increases in local prices of grain, MAG allowed the import of 150,000 tons. According to the feed industry, it will enable an additional import of 100,000 tons to cover the annual deficit.
Ecuador imported 71,000 tons of Corn in CY 2021. The United States became the leading supplier, representing 43 percent of market share, followed by Argentina, which accounted for 38 percent, and Colombia, with a market share of 9 percent. However, according to AgFlow data, the United States shipped only 20,000 tons of Corn in Jan-Oct 2022, while Argentina shipped 144,000 tons of Corn.
Ecuador is an associate state to the Southern Common Market, MERCOSUR, and a member of the Andean Community of Nations, CAN, which includes the elimination of tariffs on intra-regional trade. Those alliances give advantages to Argentina and Colombia for the export of Corn to Ecuador.
Other sources: https://www.usda.gov
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