Peru—FTA a major win for Australian agricultural producers
Australia has officially signed a free trade agreement (FTA) with Peru, which will reduce tariffs across a range of goods and services. Australian agricultural producers in particular will now have greater access to Peru’s sugar, dairy, rice, meat and wine markets. Agricultural exports to Peru totalled A$6.2b in 2017, with New South Wales accounting for over 75% of the total.
In particular, Peru’s tariffs on Australian beef will be phased out over the next five years, putting Australian producers on level terms with US producers. Peru’s annual beef consumption per capita, at 4.6kg, lagged the OECD average of 14.5kg in 2016. But the growing middle class poses upside to future consumption.
Indeed, Peru’s economy has been one of the star performers in Latin America—it is one of a handful of Latin American countries with an investment grade credit rating, and has been amongst the fastest growing over the last decade, with average incomes in excess of US$6,700 in 2017. The IMF forecasts average Peruvian incomes will reach US$8,800 per annum by 2022.