The Peruvian agriculture sector grew 1.5% in 2013 and 1.6% in 2014, according to the central bank, well below overall GDP growth of 5.8% and 2.4%, respectively. In the first six months of 2015 the sector contributed nearly 6% to GDP, and the fishing industry another 0.5%. Yet while exports have risen strongly, in the first quarter of 2015 sector growth was just 0.5%, although this picked up to 2.9% year-on-year in the second quarter.

Peru groups its exports into traditional and non-traditional products. Traditional exports – which include metals, coffee and anchovy – fell in 2014 on the back of weak prices. Having peaked at $35.9bn in 2011, in 2014 Peru’s traditional exports were $27.7bn, roughly the same as in 2010 despite increased copper production. To a certain extent, the country’s non-traditional exports have taken up the slack, with agricultural products leading the way. From a base of $925m in 2000, exports of agricultural and fish products have grown at 10-15% per annum, surpassing $5bn in 2014, in itself a 19% increase on the previous year’s figure.

The Desert Blooms

The growth of agriculture for export is one of the success stories of Peru’s recent economic development. The country’s coast is scored with numerous rivers, but the desert plains between the valleys remained uncultivated until the 1990s. The creation of large reservoirs due to the construction of hydroelectric plants gave the country a reliable water supply, and under former-president Alberto Fujimori large-scale investment in public irrigation schemes began.

In 1993 the law was changed to allow the private acquisition of land and remove size restrictions on land holdings. Large land packages on the coast, with minimum sizes typically 500-1000 ha, were auctioned with minimum investment requirements, incentivising large agribusiness firms to take a stake in Peru. To date, over 200,000 ha of land has been irrigated under the scheme, with 30 companies holding land packages of over 2500 ha.

Peru continues to expand the agricultural frontier into the desert. There are three major irrigation schemes under development, with the potential to bring an additional 150,000 ha into agricultural production. The Olmos Tinajones project, 900 km north of Lima, is set to account for 38,000 ha of this total. Installed by Brazilian firm Odebrecht, the first bidding round for land was held in March 2012 and the first sowing is scheduled to begin in 2016.

Further north, in La Libertad, the third phase of the Chavimochic scheme will bring water to an additional 63,000 ha in the Chicama Valley, to add to the 46,000 ha irrigated under the first two stages. In December 2013 ProInversión promoted the project to Asian investors during the Road Show Asia 2015. In the southern department of Arequipa, the Majes-Siguas II project was given a boost in September 2015 by the provision of a $122m loan from the CAF Development Bank of Latin America, taking total investment in the project to $550m. When complete, the project will bring 46,500 ha under irrigation. Two further projects – Puyango in Tumbes and Alto Piura in Piura – will add 41,600 ha and 19,000 ha, respectively.

Public Investment

Together, Peru’s completed irrigation projects and those under construction have required public investment of $3.2bn, according to the Ministry of Agriculture and Irrigation (Ministerio de Agricultura y Riego, MINAGRI). Only a small proportion of this is recovered through the auctioning of plots. Agribusiness firms also benefit from government incentives, paying half the rate of corporate tax and employing workers on flexible contracts. This has led to criticism of the cost of developing public irrigation projects. Fernando Erguen, president of the Peruvian Centre for Social Studies, told OBG, “We estimate that since the 1990s, private agribusiness has benefitted from what amounts to a $6bn subsidy from the state.”

Others point to the wider benefits of the scheme. “Depending on the project, it may cost $20,000-40,000 to irrigate a hectare of land, which is then auctioned to companies at a typical price of $5000,” Angel Manero, president of Grupo Agronegocios, told OBG. “However, these projects provide huge employment opportunities that feed back into the economy through increased consumption of goods and services.” The Olmos Tinajones, Chavimochic and Puyango projects are estimated to create over half a million direct and indirect jobs.

Key Crops

The effect of the irrigation scheme on Peruvian agricultural exports has been dramatic. While the country’s largest private landowner Grupo Gloria, which owns close to 80,000 ha, built its empire on the traditional sugar industry, some of the most notable export successes have been fruits and vegetables. Peru is the leading exporter of asparagus globally, reaching sales of $571m in 2014, according to Agrodataperu. Exports of grapes increased 55% from 2013 to 2014, reaching $639m, while avocado exports grew 71% to $306m.

The country’s native crops have also seen bumper harvests. The Peruvian presidency has historically taken an interest in promoting Andean vegetables and grains abroad. In the 1990s Fujimori extolled the aphrodisiac properties of maca, a turnip-like root, during his trips to Asia. In 2013, to commemorate the Food and Agriculture Organisation’s “Year of Quinoa”, first lady Nadine Heredia was named special ambassador for the grain.

Both endeavours have been, to an extent, victims of their own success. Peru exported $24m of maca in powdered form in 2014, up from $10m in 2013. Since 2003 the government has banned the export of unprocessed maca to prevent foreign buyers growing their own domestically. However, the government’s ban on exporting maca seeds and plants has been flouted by Chinese buyers offering high prices, and the root is now being grown extensively in Yunnan province, albeit with mixed results. “Chinese maca tends to grow in a shape more like ginger and its energy-giving properties are lessened. We see that Chinese buyers still prefer Peruvian maca,” José Terry Alba, agri-exports coordinator at Peru’s Association of Exporters, told OBG.


By expanding production from the highlands to the coastal regions, Peru became the world’s number one grower of quinoa in the first five months of 2015, producing 12,400 tonnes to Bolivia’s 9200 tonnes. However, the spike in supply has been met with a slowing growth of demand in the US and EU. From a peak of over $6 per kg in January 2014, quinoa prices had fallen to under $4.50 per kg by April 2015. Meanwhile, countries including the US and Finland have developed new strains of quinoa that can be grown in local conditions. To counter increased supply, Peruvian producers are looking to add value to the product. In August 2015 McDonalds in Germany launched a veggie burger made from Peruvian quinoa. A month later, Compañía Cervecera del Sur Del Perú launched a quinoa beer under its Cusqueña brand. The other option is to focus on organic. “Quinoa grown on the coast or abroad requires pesticides,” said Terry. “In the Andean plateau it grows freely, and we expect high demand for the organic product.”

Berries On The Rise

Peru’s agribusiness sector has a history of looking south for inspiration and many of its most profitable exports were previously cultivated by Chilean farms. The agribusiness success story of 2014 was blueberries, with exports hitting $30m, twice the previous year’s total. That figure is expected to hit $70m in 2015. “In recent years we have seen 2000 ha of new land seeded with blueberries, with investments of around $100m,” said Manero. “In Peru we can seed in any month and export in September and October, when supplies from other countries such as Chile dry up.” Using this model Peruvian blueberry producers can demand higher prices.

According to research by Agronegocios, a local digital information platform, blueberries were the most profitable agri-export product in 2014, offering profits of 69%, compared to 31% for avocados and 13% for asparagus. The cultivation of raspberries is the logical progression, and kiwifruit, of which Chile exports $200m worth every year, could be the next focus for Peruvian export farms.

Another star agricultural product in recent years has been palm oil, which has seen continuous growth. While in 2000 production totalled 181,000 tonnes, by the end of 2012 Peru was producing some 518,300 tonnes. The last few years, however, haven’t come without challenges. The sector has seen an increase in competition from Argentina and a decrease in the international market price, which had fallen by 14% in the first half of 2015. “The palm oil chain has high aggregate value. Crude palm oil in the future will be absorbed – mainly by the biodiesel market, which we expect to pick up after the imposition of the antidumping compensations currently in process – but also by the food industry, where demand for palm oil derivate is increasing,” Renzo Balarezo, CEO of local grower Grupo Palmas, told OBG.

Traditional Exports

The situation is less rosy for Peru’s traditional export products, however. With exports of $728m in 2014, coffee remains the country’s biggest agricultural product but growers are facing significant challenges. In the first eight months of 2015 export income from coffee fell to $228m compared to $320m in the same period in 2014. After the bumper harvest in 2011, which brought in revenues of $1.5bn, the coffee regions were hit by a combination of disease and lower prices. A plague of leaf rust in 2013 was followed by an infestation of borer beetle the following year.

Production sank from 332,000 tonnes in 2011 to 209,000 tonnes in 2014, its lowest level since 2005. In the first eight months of 2015 coffee production again fell, to 66,700 tonnes, its lowest level in 19 years. However, the future of the industry looks set to improve slightly. “Between 2013 and 2015 Peru will replant 50,000 ha of coffee plantations out of a total of 425,000 ha, and by 2017 we hope to recover to 2011 levels of production,” Lorenzo Castillo, CEO of the National Coffee Board (NCB), told OBG. “The problem is that prices are set to remain low, and we could see coffee fall behind grapes as the country’s leading agricultural export.”

Without government subsidies, such as those enjoyed in Colombia and Brazil, the industry could experience big changes in the coming years. Already some growers with plantations under 1000 metres in altitude are converting their plots to grow cocoa, pineapples and citrus fruits. The NCB hopes that niche coffees often grown at over 2000 metres can provide a boost to the industry. “Peru can produce niche coffees with infusions of fruits, nuts and flowers. These products have the capacity to drive growth in demand for Peruvian coffee as a whole,” said Castillo.

National Consumption

While the export sector goes from strength to strength, production for national consumption remains stagnant. Chicken, milk, rice, sugar and potatoes are the key staples of the Peruvian diet, and the country consumes $12bn worth of food each year.

Chicken accounts for over one quarter of this value, and a change in the price of the meat can have a distorting effect on overall figures for agricultural GDP. “The livestock business has shown a steady recovery, following the overall trend in the agricultural sector. The primary difference, however, is that the livestock business is driven by domestic factors as opposed to export markets,” Antonio Armejo, president of iLender, a supplier to the animal feed industry, told OBG.

In 2014 Peru imported $3.7bn in agricultural products. Away from the coastal export hubs, farmers in the highlands and forest regions are finding it harder to compete with imports and forthcoming reductions on tariffs on dairy imports could have major effects for the local cattle industry.

The development of new roads should lower transport costs for inland farmers by connecting them to major cities. “Road infrastructure is the most urgent problem that needs to be addressed by the government. It mainly affects agricultural processes such as supply chain management and the transportation of fresh food; improved infrastructure will reduce food spoilage by decreasing shipping times,” Michael Horney, CEO of Peruvian Agritrade, an agricultural exporter, told OBG. Meanwhile, MINAGRI has established a $357m fund, called Mi Riego, to develop irrigation projects in the Andean plateau. Access to finance is the other area being tackled by government policy.


According to Agrobanco, a state-owned bank focused on providing agricultural finance, there are 2.2m smallholder farmers in Peru. Of these, half live a subsistence lifestyle and are not considered clients for loans. Of the remaining 1.1m, 300,000 have accessed a credit line, either through Agrobanco or from one of the country’s 22 microfinance organisations. Between 2010 and 2014 Agrobanco expanded its client base from 20,000 to 100,000 and increased its loan portfolio from $50m to $650m. The bank offers a variety of products ranging from short-term credit to tide farmers over to harvest time to long-term loans for the purchase of land and machinery.

“Non-performing loans are still low when compared with the regional average and also when compared to the rate in the microfinance segment, even as this segment has grown significantly in recent years,” Enrique Díaz, Agrobanco’s president, told OBG. “A lack of information and transparency has lead to overly conservative lending practices in the agricultural sector. This makes the sector seem more risky than it actually is, when in fact, it can be quite profitable for investors.”

Decision Time

On the back of the success of Peru’s agriculture-for-export model, MINAGRI and the Ministry of Production (Ministerio de la Producción, PRODUCE) continue to develop policies to increase the added value of the agricultural sector.

PRODUCE has identified the aquaculture and forestry sectors (see analyses) as two areas of particular potential. MINAGRI has supported the development of Sierra Exportadora, a public company that aims to move the country’s Andean and jungle crops up the value chain. With a wide range of products from cranberry juice to cheeses, the company reached sales of $200m in 2014, more than double its results for the year. Public backing has allowed Sierra Exportadora to expand its business model across the highlands and rainforest. “For 2015 we have decided to focus on expanding the number of beneficiaries of our services beyond the current 78,000,” Alfonso Velásquez Tuesta, CEO of Sierra Exportadora, told OBG.

For exporters, much will rest on how the sector responds to changes in the global industry. In addition to Western markets attempting to grow their own quinoa locally, advances in technology, especially genetically modified crops, may mean that the advantages Peru holds in terms of climate and the long growing season could be nullified. Peru has had a moratorium on the entrance of genetically modified organisms in place since 2011.

One option would be for the country to focus on organic production, exploiting growing demand for organic products in the US and Europe. The other path would be to embrace genetically modified products. In 2015 there were calls for the moratorium to be lifted and government incentives such as the National Agrarian Innovation programme – under which firms can get up to 80% of their research and innovation costs subsidised by the government – could be used to benefit the development of genetically modified crops suitable to Peruvian conditions. “We can either go organic or enter into modified crops, but if we do the latter we must enter hard with strong state support,” said Manero. Horney agrees. “To become more competitive in international markets, Peruvian agro-exporters need to invest heavily in research and development. This will make us more competitive and can, if successful, protect the industry from climate-related events,” he told OBG.


Peru has a strong fishing heritage. The Humboldt Current brings cold plankton-rich waters from the south, creating the perfect environment for anchovy, the country’s primary fish export. In the early 2000s Peru regularly accounted for 8-9% of the global catch in terms of tonnage. The dark-fleshed, strong-smelling anchovy is not often found on menus. Instead it is converted into fish-meal and oils in the processing plants that line the coast and shipped abroad in huge quantities. In 2012 Peru exported over $2bn of anchovy product, mainly for use in animal feeds. In 2015 Scotiabank forecasts Peru to export $1.4bn of fish products, with much of it used for animal feeds in China.


In 2009 a quota system was introduced by PRODUCE to prevent overfishing. Twice a year the government’s Marine Institute of Peru ( Instituto del Mar de Perú, IMARPE) scours the country’s fishing zones to produce an estimate of the total biomass of anchovy and PRODUCE sets a quota to be met within a defined fishing season.

Gone are the years of bumper catches, such as 2005 when Peruvian vessels brought in 8.6m tonnes of anchovy. However, the loss in volume has been more than made up for by increased international prices for fishmeal and oils. Prior to 2008 a tonne of fishmeal sold for around $800-900, but by October 2014 this had risen to a peak of $2400. This has since dropped, with a tonne of Peruvian fishmeal still earning $1650 as of August 2015.

Fishmeal is a key feed for aquaculture projects, and while commercial fishing catches have plateaued, aquaculture has boomed, pushing up demand for the product. The quota system has also encouraged companies to make efficiency gains, and led to the consolidation of the sector.

Despite its unparalleled resource, Peru’s fishing industry remains vulnerable to climactic change and government decree. During seasons when the water is warmer than usual, the anchovy stock seeks colder climes at depth or closer to the coastline. Commercial vessels have long been excluded from fishing within five nautical miles of the coast, but a new decree introduced in August 2012 extended this boundary to 10 nautical miles (18.5 km). The new restriction – combined with warmer weather – meant that the industry only managed to catch 68% of its quota for the first season of 2014. Then, in October 2014 the IMARPE study calculated a total biomass of just 1.45m tonnes of anchovy, compared to over 10m tonnes the previous year. The second fishing season of 2014 was cancelled, resulting in the industry finishing with a total catch of just 2.56m tonnes for the year.

By March 2015, however, the estimated biomass had risen to 9m tonnes and a temporary suspension of restrictions permitted commercial fishing to return to the zone between five and 10 nautical miles from the shore. As a result 2.8m tonnes of anchovy were netted, 97% of the quota. The sharp increase in fish stocks show the limitations of the IMARPE system. “It’s impossible that the biomass of anchovy grew from 1.45m tonnes to 9m tonnes in three months,” Jorge Risi Mussio, general manager of the National Fishing Society, told OBG. “The fish were there, but they had migrated to deep waters out of the range of the study’s equipment.” In October 2015 IMARPE announced a fish stock of 3m tonnes. Given the lower than expected number, in November PRODUCE set a quota of 1.11m tonnes for the second fishing season.

The Peruvian fishing industry needs to diversify. “The sector has an over-reliance on anchovies. This is unsustainable, as anchovy resources are becoming more and more scarce each year,” Dario Alvites, general manager of industrial fishing company Peru Pez, told OBG. Two opportunities for growth are open to Peru’s fishing industry. In 2014 the country exported a record $439m of giant squid. Peruvian law designates that this resource can only be exploited by artisanal fishermen, but many in the industry believe it is underexploited and could be commercially fished. The other opportunity is for the anchovy industry to move up the value chain. “With consumers looking to improve the quality of their diet, demand for fish oil will remain strong,” Risi told OBG. “We need to evolve towards fortifying the essential elements such as omega-3 oils and eliminating odours so that they can be included in a variety of food products.”


The fall in revenues from Peru’s traditional exports has, to a large extent, vindicated the decision to diversify production through irrigation schemes. MINAGRI expects agri-exports to reach $7bn by 2017, and the country’s large agribusiness firms have successfully introduced dozens of new products to Peruvian soils. The focus in the coming years will be on helping national producers compete with imports and developing new industries.

The good news is that – despite the strong growth of non-traditional agriculture exports – the industry has only scratched the surface. The cultivation of new lands combined with PRODUCE’s push to develop the forestry and aquaculture sectors should see these industries play an increasingly important role in the economic future of Peru.