The general manager of pasta company Parma has warned that Chile's pasta industry will suffer if new entrants into the market cut prices in order to win over consumers.

Gregorio Derado was responding to the recent announcement by Alicorp, Peru's principal pasta producer, that it registered trademarks with Chilean authorities in order to build a pasta factory within the next few years.

Derado said he was already concerned that there was significant overproduction of pasta in a market worth an annual US$115m, and that increased production and competition could drive down prices to such an extent that smaller companies would be driven out of business.

The Parma executive warned consumers that a price war could entail higher prices in the long term, because without smaller competition, larger concerns would be able to set high prices for their product.

Derado said that Parma would not be making any further business investment until the market situation is clearer.

By Steve Anderson, just-food.com correspondent.