CHILE – Chile’s wheat production is expected to witness a continued decline in the upcoming marketing year of 2024-25, extending a trend spanning nearly a decade.
According to a report from the Global Agricultural Information Network (GAIN) by the Foreign Agricultural Service (FAS) of the US Department of Agriculture, factors such as high input costs, low prices, and narrow profit margins are contributing to a reduction in both harvested hectares and overall production.
The report, released on March 29, projects a 2.5% decrease in harvested wheat area, totaling 195,000 hectares, resulting in a drop in production to 1.17 million tonnes from the previous 1.2 million tonnes.
Despite improved yields on planted hectares attributed to better water availability and enhanced farmer efficiency following years of drought conditions, the overall production loss is anticipated to persist.
The increase in wheat prices is offset by the high cost of inputs, particularly fertilizers, thereby limiting the potential expansion of harvested area. This trend has been consistent since 2015-16, reflecting the challenging landscape for wheat cultivation in Chile.
Concurrently, wheat imports for 2024-25 are forecasted to rise by 3.6% compared to the previous year, reaching 1.45 million tonnes to meet domestic consumption demands.
Wheat is predominantly utilized for bread production in Chile, where bread is considered a staple food with inelastic demand, leading to relatively stable consumption patterns.
Canada and the United States remain the primary sources of wheat imports for Chile, with Argentina experiencing a decline in its wheat export contribution due to an intense drought. This decline has positioned Argentina as the third top supplier, down from its previous status as the main supplier.
In contrast, corn production in Chile is projected to experience a marginal increase of 0.3% in 2024-25, reaching 630,000 tonnes, driven by unchanged harvested areas and slightly higher yields. However, imports are expected to rise by 3.5% to 2.4 million tonnes to meet domestic consumption needs.
Despite facing challenges such as low prices and high input costs, the planted area for corn remains relatively stable due to the demand for feed and its usage in crop rotation. However, growth in planted areas is constrained by the high cost of inputs, particularly imported fertilizers.
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