South American Maize Market is projected to grow at a CAGR of 5.4% during the forecast period (2020-2025). Increasing demand for food crops such as Maize due to rise in population, favorable government policies and rapid growth in ethanol industry are some of the factors driving the market growth. The regional dominance in exports of maize from countries such as from Brail, Argentina and Paraguay due to rise in global demand for corn as animal feed is stimulating the market growth.
Key Market Trends
Growing Ethanol Production
The domestic consumption of corn is projected to increse during the forecast preriod which is majorly driven by expanding local grain ethanol industry. In Paraguay, corn is the raw material for ethanol production with at current eight ethanol plants will expected to consume approximately 1.22 million tons of corn by 2020. Further the research conducted on the benifits of using of corn in ethanol production has further augumented its demand in the region. For instance, The Secretariat of Agriculture, through its research agency INTA, has focused on the carbon footprint of local gasoline that has a 12 percent content of bioethanol. The result has shown that bioethanol from corn reduces GHG emissions up to 65 percent compared to fossil gasoline. With rapid domestic ethanol production, the demand for corn is projected to grow during the forecast period.
Favorable Government Initiatives Supporting the Market Growth
The regional governmet initiative such as in Brazil, Argentina and Paraguay favoring the corn production will stimulate its market growth during the forecast period. Brazil support the corn production in the country by providing subsidized credit and price support (minimum guaranteed prices). The Brazil government through its Premium Equalizer Paid to the Producer program (PEPRO) pays farmers directly when commodity prices fall below a predetermined price. Under the PEPRO program, government subsidizes the transactions by by paying a premium to commercial buyers, which is the difference between the minimum price (received by producers) and the market price. This mechanism allows the government to manage supply of corn in deficit regions without buying it directly. With increase in number of government policies supporting the maize production, the market is expected to grow during the forecast period.
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