- Peru’s presidential election will finish on Sunday.
- If Pedro Castillo wins, many Peruvian industries, including sugar, run the risk of being nationalised.
- With this, exports could be heavily taxed and become unviable.
A Nationalised Sugar Industry?
- The final round of Peru’s presidential election will take place on Sunday.
- The final candidates are Keiko Fujimori, daughter of the imprisoned ex-President Alberto Fujimori, and Pedro Castillo, a former teacher and Union Leader.
- Castillo won the first round with 18% of the vote and has held a lead in the polls ever since.
- We don’t believe a Fushimori victory would change the current market dynamics too drastically.
- However, Castillo has more radical proposals and has expressed interest in nationalising various industries.
- This could lead to a decline in investment and productivity in many areas, as we’ve seen in Venezuelan oil production.
- It also raises concerns for international trade, as import and export taxes could also be implemented.
- Peru currently exports around 300k tonnes of sugar a year, with most of this going to the USA and the EU.
- However, any alterations to Peru’s trading policies could see its access to these markets reduced, if not lost entirely.
- Producers may also see their returns and profitability fall, which could restrict production growth.
- With this, Peru may have to turn to Colombia and Bolivia for more of its supply.
- However, Castillo’s changes could impact Colombia’s ability to export to Peru, due to the aforementioned taxes.
- Colombia would instead have to sell its sugar onto the world market for a lower price.
- Its mills would therefore see returns and prices respond negatively.
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