Peru FoodNews 2010 - GBR

A Global Business Reports publication 3
PERU
Conquering the world markets
With a number of competitive advantages and its impressive biodiversity, Peru is set to become one of the major food
suppliers to the world over the next years. This report is compiled and written by Alfonso Tejerina, Marina Borrell Falcó,
Sharon Saylor and Tom Willatt of Global Business Reports.
THE NEXT BIG FOOD
SUPPLIER
Peru has been exporting its products
since the Spaniards first arrived
five centuries ago. Indeed, Peru is
considered to be the birthplace of a number
of products that are part of peoples’ daily
diet worldwide, including staples such as
the potato.
Today the industry is entering a new
era as political stability encourages fresh
investments to exploit Peru’s enormous
natural riches.
Peru is the world’s largest exporter
of asparagus and an important source
for avocado, grapes and peppers, whilst
maintaining a strong position as a coffee
exporter (which remains the country’s main
agro export product).
Peru’s fishing sector is dominated by
fishmeal, of which Peru is the world’s
largest producer, but is now moving towards
more canned and frozen fish and seafood
for human consumption.
Finally, the emergence of Peru’s middle
classes coupled with numerous free-trade
agreements make Peru a very attractive
country to set up a factory for processed
foods that can be sold internally or abroad.
Agro in the spotlight
The development of ‘non-traditional’
agriculture (‘traditional’ in Peru includes
coffee, sugar, cotton, potato, corn, rice) has
been phenomenal over the past couple of
decades. Since 1990 the country has been
recovering from the agrarian reform of
1969. This reform was intended to promote a
fairer distribution of the land but, according
to many, instead caused the collapse of the
industry.
Guillermo van Oordt, President of the
Peruvian Association of Producers and
Agro-exporters Guilds (AGAP), explains:
“All the large farms were transformed
into cooperatives that proved to be very
inefficient, while small farms were given to
workers who would pass them on to their
Fabio Matarazzo,
CEO of Camposol
children, so, very rapidly, these properties
became tiny. Agriculture would only
become a viable business again in 1990,
thanks to the political reforms”.
The situation further improved in 1992
as the leaders of the Shining Path terrorist
organisation were finally captured, and
the U.S. passed the ATPDEA act (Andean
Trade Preference and Drug Eradication Act)
by which duties were lifted on U.S. imports
of many products from Peru, Colombia,
Ecuador and Bolivia. For Peru, this treaty
has remained in force until the recent
implementation of the free-trade agreement
with Washington. Other significant FTAs
Peru has in place today are with Canada,
China and most recently with the European
Union.
Today, the agribusiness is reaping the
fruits of this evolution. The Peruvian coast is
being transformed into a natural greenhouse
where productivity rates exceed the levels
of most other countries due to a favourable
climate and the latest irrigation techniques.
Corporate governance has improved leaps
and bounds and some exporters are even
listed on the stock exchange.
In a country where poverty rates are a
matter of national concern, agriculture has
enabled some provinces along the coast
to enjoy full employment. “Agriculture
accounts for 8% of the country’s GDP, but
in terms of employment the impact is much
bigger. 30% of Peru’s population is linked to
the agriculture sector,” points out Víctor M.
Noriega, the Director of Competitiveness at
the Peruvian Agriculture Ministry.
The Peruvian coast offers excellent conditions for
agriculture (Photo courtesy of Icatom)
Competitiveness is indeed a key word,
because it drives growth and promotes
employment. The authorities seem to have
realised that incentives work better than the
traditional subsidies.
According to Alfonso Velásquez, former
Minister of Production and currently the
President of Procesadora, an exporter of
beans and other products: “These are new
times for Peru. The government is changing
the way it supports the farmers. State
expenditure is not only dedicated to reduce
poverty directly with social programs, but
also to the improvement of competitiveness
of different industries”.
Peruvian fish: proteins
for the world
Peru is also blessed with one of the world’s
richest seas, thanks to a combination
of temperature and currents that result
in the presence of lots of plankton. The
availability of a large biomass has pushed
the development of a big fishmeal and fish
oils industry. In 2009, Peru produced 1.4
million tonnes of fish meal (it is the world’s
largest producer). Currently the business is
enormously profitable as the first months
of 2010 have witnessed unprecedented
high prices of over USD 1 700 per tonne
of fishmeal.
Yet, there is a growing trend in the
industry towards increasing the share of
the catch intended for human consumption.
In 2009, 84% of the total fish catch was
dedicated to fishmeal and fish oils, but some