Increased investment and the expansion of irrigated land along the Peruvian coast has ensured the continued development of large-scale industrial agriculture in Peru for more than two decades. After introducing dozens of new products to Peruvian soils, local agri-business firms have successfully expanded and diversified the country’s agricultural export base. Today, Peru features an established but expanding agriculture-for-export model, the success of which can be seen in the emergence of agricultural exports as the second-highest source of foreign currency for the nation, behind only mining.

While agriculture for export has moved from strength to strength, some disparities in productivity and profitability between the coast and the Andean and jungle regions have posed a challenge for successive governments. To address this, the government of President Pedro Pablo Kuczynski, in office since July 2016, has launched AgroPróspero, a development plan that is expected to stimulate growth, double agricultural exports and reduce rural poverty by the end of the current presidential term in 2021.

Despite the challenges, the sector seems poised for continued growth, supported by positive external market conditions and the continued expansion of irrigated land for industrial agriculture.

Success Story

The desert planes between the valleys on the Peruvian coast remained uncultivated until the 1990s, when the creation of large reservoirs gave the region a reliable water supply. In 1993 the government reversed legislation tied to the previous agrarian reform, allowing the private acquisition of land and removing size restrictions on holdings. Public investment in large-scale irrigation infrastructure projects commenced and plots, typically a minimum of 500-1000 ha, began to be auctioned off with minimum investment requirements.

In 2000 the Law for the Promotion of Investment in Agriculture was introduced, establishing a number of benefits, including a 15% income tax, nearly half the rate applied to other sectors. The measures encouraged private investment in industrial agriculture and paved the way for the establishment of Peru’s very own export-oriented agricultural model. To date, more than 200,000 ha of land has been irrigated under public schemes, with around 30 companies holding land packages larger than 2500 ha. The country’s agro-export industry counts 161,000 ha of planted surface, excluding coffee and cacao fields, with more than 400 active firms.

Highly advanced practices pushed productivity and profitability rates on the coast significantly above the national average, while the introduction of new products to Peruvian soils diversified the export base. According to the Ministry of Agriculture and Irrigation (Ministerio de Agricultura y Riego, MINAGRI), since 2006 non-traditional exports have increased by an annual average of 16%, with annual production volumes of key non-traditional crops – including avocado, blueberries, cacao, quinoa, grapes and olives – doubling in the same period.

By 2015 the country had emerged as the leading producer and exporter of asparagus, quinoa and maca, the third-largest exporter of avocado and artichoke, and ranked among the top-10 global suppliers of grapes, peppers, beans and mangoes, according to MINAGRI. Peru’s agricultural production value reached a peak of PEN32.2bn ($9.5bn) in 2016, up from PEN20.2bn ($6bn) in 2010.

Recent Performance

While the sector experienced average annual growth of 3.2% between 2011 and 2015, its performance remains vulnerable to climatic changes and other risks.

After growth of 5.9% in 2012, a combination of adverse climatic effects and coffee leaf rust – a fungus which affects coffee, the country’s main traditional export – led to significant declines in production volumes of key crops, causing growth to slow to 1.5% in 2013. The sector began recovering in 2014, with growth reaching 1.9% and accelerating to 2.8% by 2015, as global demand and international prices for select exports increased.

By the end of 2016, however, growth had slipped to 1.8% again, below the national growth rate of 3.9% for the year, after the sector felt the impact of El Niño during the first months of the year. Agricultural production, which accounts for the largest share of the sector’s value at 70%, rose by a negligible 0.6%, driven by production increases in grapes (15%), coffee (11%), avocados (20%), cacao (17%), paprika (45%), olives (46%), mandarins (13%) and artichokes (21%). Nonetheless, a number of crops registered significant production declines, including cotton (35%), quinoa (27%) and sugar cane (4%).

In contrast, the livestock segment, which accounts for roughly 30% of the sector’s total value, expanded by 3.6% in 2016, driven by important increases in the production of poultry, eggs and pork.

While agriculture continues to play an important socio-economic role, providing employment to roughly 25% of the population, its contribution to GDP has progressively declined from 7% in 2000 to 5.97% in 2016, according to data from the National Institute of Statistics and Informatics.


The agro-export industry in the country, however, has gone from strength to strength in recent years. According to MINAGRI, agricultural exports increased steadily from just under $3.4bn in 2010 to a record of $5.79bn in 2016.

The increase helped cement the sector’s status as the second-most important source of foreign currency at the national level, accounting for 10% of total exports. According to MINAGRI, agro-export revenues rose by 9.6% in 2016, supported by increased demand from key export markets Colombia (37%), Spain (34%), Belgium (24%) and the Netherlands (16%). Non-traditional exports, which make up 85% of total agricultural exports, increased by 7% to over $4.9bn, a noticeable slowdown after double-digit growth in recent years. Nevertheless, export revenues of blueberries increased by 148% y-o-y, while revenues for fresh avocados rose by 30.5%.

Traditional exports accounted for 15% of agricultural exports in 2016, having increased by 27% to $874m. The improved performance reflected higher revenues for unroasted coffee, which rose by 31% to surpass $750m. Though the increase is significant, that figure remains well below a peak of $1.67bn in coffee revenues in 2011, when high domestic production coincided with high international prices.

Key Crops

Peruvian coffee producers continue to be affected by low international prices and coffee rust disease, both of which have had a negative impact on production and export volumes.

Nonetheless, ongoing efforts could see the industry recover in the coming years. A new sector development plan for the 2016-18 period is set to renovate around 80,000 ha of coffee plantations and significant increase local consumption by some 10%, among other things. In addition, Peru has a significant opportunity to solidify its position as a major global supplier of speciality coffee. According to the National Coffee Board, Peru ranks among the top 10 producers and exporters of the product, with around 120,000 ha of certified speciality coffee.

Among non-traditional products, cultivated surface for recently introduced crops is expanding steadily as these rise to the top of the export list. The blueberry is the most recent crop to experience exponential growth, with production increasing 12-fold since 2013 to an estimated 20,000 tonnes. Export revenues for the fruit reached $237.1m in 2016, according to MINAGRI, up from $95.8m the previous year.

Meanwhile, production of avocados and grapes increased by 20% and 15%, respectively. Grapes remained the top-earning export fruit, with revenues of $646.3m, while avocado exports reached $396m after a 30.5% y-o-y increase.

After expanding production of quinoa from the highlands to the coastal region, Peru became the leading exporter of this superfood in 2015, with exports reaching 42,000 tonnes and $143m in revenues. However, external market conditions have since deteriorated. An increase in the global supply of quinoa was met with slower growth in demand in the US and the EU, leading average prices to fall by 36% and 3.3% in 2015 and 2016, respectively.

By December 2016 the price of quinoa had fallen to $2.34 per kg, according to Agrodataperu, from a peak of over $6 per kg in January 2014. Despite a rise in exports by weight in 2016, export revenues fell to $103m, down from $143m the previous year.

Fresh Approach

After assuming office in July 2016, Kuczynski’s government launched AgroPróspero, the sector’s new five-year development programme, which aims to achieve annual growth of over 4%, double export revenues to $10bn and halve rural poverty by 2021. “The goal is to achieve a prosperous and inclusive agricultural sector, increasing productivity, competitiveness and profitability, with more jobs, better income distribution, poverty reduction and greater food security for Peruvians; in a context of equity and the sustainable development of natural resources,” José Manuel Hernández Calderón, minister of agriculture and irrigation, said during the presentation of the budget for the 2017 fiscal year. The agriculture sector received an allocation of more than PEN2bn ($592.8m) for the 2017 fiscal year, an increase of 0.4% from the previous year.

Key Programmes

In a bid to narrow the technological gap between industrial and rural agriculture, MINAGRI recently introduced two new programmes. Sierra Azul, launched in September 2016, aims to rehabilitate and build irrigation infrastructure to support small farmers in the Andes.

The programme aims to irrigate 5000 sq km of land and rehabilitate 1000 sq km of agricultural terraces, known locally as andenes – many of which date back to the ancient Inca civilisation – within five years. Some PEN300m ($88.9m) was allocated for the first stage of the programme, which covers 11 Andean regions, including Puno, Cusco, Ayacucho, Huancavelica and Apurímac. The ministry’s second key programme is Serviagro, a platform for the provision of a range of services – including technical assistance and training – for small-scale farmers. Launched in January 2017, the programme is expected to benefit more than 500,000 producers in the next five years, according to Hernández. With an initial budget of PEN260m ($77m) for 2017, the platform is expected to assist over 280,000 producers and contribute to the integration of some 55 new producers into the Sierra y Selva Exportadora programme.

A state-run platform, Sierra y Selva Exportadora works to push Andean and jungle exports up the value chain by helping to integrate small producers in the country into national and international markets.

Livestock & Forestry

To stimulate growth in the livestock segment, the General Directorate of Livestock was created to help oversee the sector’s development and implementation of the new National Pasture Plan. The latter aims to seed 150,000 ha of cultivated pastures by 2021, a measure expected to significantly increase productivity by roughly doubling the number of cattle to graze per hectare. The government hopes the new measures will enable the sector – on which 150,000 families depend – to achieve annual growth of 6% by 2021.

Kuczynski’s government is also set to continue his predecessor’s efforts to combat deforestation and encourage the sustainable and formal development of the country’s extensive forestry resources. To this end, in early 2017 the government established the Technical Board of Forest Development, a working group tasked with developing a strategic action plan. New measures are expected to increase forestry exports nearly 10-fold to $3bn by 2021, along with the reforestation of 3.2m ha of forested lands.

Forestry remains one of Peru’s most promising industries, with the potential to contribute up to $5bn to the country’s GDP annually, according to authorities. With 68m ha of forested land, Peru has the world’s ninth-largest forest resource, and the second-largest in Latin America, after Brazil. Nonetheless, only 2m ha out of an estimated 10m-12m ha of Amazon rainforest are exploited by commercial forestry.

The industry also accounts for a small share of GDP, currently at 1%. Growth in wood exports has remained subdued in recent years. According to ADEX, wood exports reached an estimated $125m in 2016, slightly up from $121m in 2013.


The government will also be sharpening its focus on innovation, with plans to increase national production of improved seeds through the National Institute for Agricultural Innovation.

Authorities hope that this will help increase the use of improved seeds, particularly among small-scale farmers, from 12% currently to 50% by 2021, which many believe will have a noticeable impact on productivity. As part of the ongoing effort to increase preservation of the country’s biodiversity, the government has also launched the National Germplasm Bank, which will identify, register and preserve various native and exotic plants. “There is growing focus worldwide on achieving high levels of food security. Research and development (R&D) is key for this. Peru’s agro companies are keeping up with this global trend and investing in R&D,” Rubén Carrasco, general manager of Farmagro, told OBG.

Lagging Behind

The sector’s new development plan is designed to respond to the significant disparity in competitiveness at the national level. While the sector has been transformed by industrial agriculture on the coast, development in the highlands and jungle areas continues to lag significantly behind, hindered by a lack of competitiveness stemming from fragmentation, lack of technology and logistical challenges. Though these regions’ contribution to the country’s export base remains modest, they offer a number of resources with significant export potential, in particular wood, palm oil and superfoods such as Andean grains and nuts (see analysis). According to MINAGRI, the majority of the country’s farming community of 2.5m is made up of small farmers, 90% of whom hold less than 5 ha. The percentage of farmers integrated into the formal economy is also low, at an estimated 30%. This, coupled with the lack of land titles in many cases, has made obtaining access to credit difficult.


At an estimated 25% currently, credit penetration remains low, though it offers significant room for growth. According to Agrobanco, the public lending institution for the agriculture sector, of the 2.2m small farmers in Peru, some 1.1m potentially qualify for a loan. Data from Superintendency of Banks and Insurance shows that by the end of 2016 multi-service banks accounted for 67% of credit to the sector, followed by Agrobanco (17%), municipal banks (9%) and financial agencies (5%).

As for Agrobanco, the institution has experienced considerable growth in recent years. The total value of direct credit issued by Agrobanco increased from PEN366m ($108.5m) in December 2012 to PEN1.6bn ($474.2m) by the end of 2016.

To facilitate access to credit for small producers, the government plans to strengthen Agrobanco’s role with a PEN300m ($88.9m) injection of funds, a measure that is expected to help reduce interest rates for loans, which currently stand at 18%. In the 2017 fiscal year the government is also allocating PEN184m ($54.5m) in credit to the sector through AgroPeru, MINAGRI’s special guarantee fund, which will benefit approximately 30,000 producers.

Risk Management

Moreover, MINAGRI is working to expand Agrobanco’s role to enable the institution to manage insurance funds, with a view to have 550,296 ha of agricultural land covered and 229,290 producers insured during the 2017 fiscal year. Given the threat of climatic change seen in recent years, insuring crops is increasingly important. Peru is particularly vulnerable to the threat of El Niño, which is known to cause torrential rains in the north and drought in the south of the country. In July 2015 the government declared a state of emergency in 14 regions in preparation for the arrival of a moderate-to-strong El Niño event.

According to Juan Manuel Benites, the former minister of agriculture and irrigation, MINAGRI took 603 preventive measures in 2015 to mitigate the effects of the phenomenon in the 14 regions, representing an investment of PEN544.5m ($161.4m). These efforts helped ensure only 1% of crops were affected from the loss of 40,000 ha.

Though the weather phenomenon was weaker than expected in 2016, it still impacted production of key crops, including quinoa, potatoes and mango. In early 2017 a new alert was issued, warning of a possible, moderate El Niño event. The last strong El Niño occurrence was in 1997–98, an event in which the country sustained catastrophic damage to its infrastructure and agriculture and fisheries sectors.

Irrigated Land

Ongoing large-scale irrigation projects on the Peruvian coast are set to expand irrigated land by 350,000 ha in the medium term, supporting the expansion of the country’s export base. The Olmos Tinajones project in the Lambayeque region was completed in 2014, bringing irrigation to an additional 40,000 ha. As of early 2017 more than 15,000 ha of those had entered into production. Further north in La Libertad, the third phase of the Chavimochic project will bring irrigation to an extra 63,000 ha in the Chicama Valley, in addition to the 46,000 ha irrigated under the first and second phases of the project. A $715m investment, it could nonetheless face delays. According to local media, as of March 2017 the project was on hold, as authorities prepared to re-award the contract following the exit from the consortium of Brazilian construction company Odebrecht, which is currently the subject of a major bribing investigation.

In the southern department of Arequipa the second phase of the Majes-Siguas project will add another 38,500 ha of irrigated land, with a total investment of $550m. Two other projects – Puyango Tumbes in Tumbes and Alto Piura in Piura – will add a further 41,600 ha and 19,000 ha, respectively.

“In order to tackle the challenges affecting water resources, the National Policy and Strategy for Water Resources was established to improve the quantity, quality, opportunity and culture management of water, as well as the impact of climate on water resources by 2035,” Juan Carlos Sevilla, former director of MINAGRI’s National Water Authority, told OBG.

Export Markets

Ongoing efforts to reach new markets will be a key factor in Peru meeting its goal of doubling exports by 2021. The country has continued to make inroads to meet phytosanitary requirements and gain access to new export markets in recent years, particularly in Latin America and Asia. Recent advances in this area include gaining entry for quinoa exports to India, grapes and mangoes to South Korea, avocado and corn to Chile, avocado to Japan and grapes to New Zealand (see analysis).

Peruvian agro-exports reached 142 countries in 2016, according to MINAGRI. The US accounted for the largest share of exports with 30.7%, followed by the Netherlands (13.7%), Spain (6%), Germany (5.3%), the UK (5.1%), Ecuador (4%), Colombia (3%), Belgium (2.7%), Canada (2.6%), Chile (2.5%) and France (1.9%). Together, these 11 countries accounted for some 77.5% of the exported total.


Despite the effects of El Niño in 2017, agriculture’s prospects remain positive. According to MINAGRI projections, the sector is expected to post average growth of 3-3.5% in 2017, with exports projected to increase by 20-25% to reach $6bn.

In the longer term, the ongoing public programmes to assist small-scale farming in Peru should help to ensure that more smaller producers are integrated into the attractive export industry, while public-private initiatives to develop Peru’s significant forestry resources could see this industry play an increasingly important role in the future of the country’s economy.