Peru’s pro-market farming policies bear fruit

In the Chincha valley, three hours south of Lima through desert and sand dunes, sits La Calera, one of the many massive farms that pockmark the arid coast.

“Nothing should grow here — we are in one of the driest areas on earth — yet, with smart thinking, we’ve managed to make it work,” says Santiago Casartelli, chief executive of Diamond Bridge, a subsidiary of La Calera.

Established in the 1980s, La Calera serves about 30 per cent of the Peruvian market for barn eggs, but it is also the country’s largest exporter of citrus fruits and a large producer of avocados.

Just above the cloud of mist that envelops the capital and its surroundings, on the edge of the 1,500 hectare site and amid fields of cacti, farmhands are picking blueberries — the latest frontier in the country’s agricultural drive.

In the past decade, Peru has become the world’s largest exporter of blueberries. About 270,000 tonnes — worth more than $1.36bn — were sold overseas last year. The ministry of agriculture puts the annual growth rate of the crop at 123 per cent. Only China and the US produce more of the fruit.

“It all started with a small trial, just to learn a little about the crop, and it exceeded by 10 times our expectations in both yields and fruit quality,” Casartelli says of his plots. He plans to double the 50 hectares of blueberries in La Calera’s farm in Chincha this year and eventually expand to more than 200 hectares. A similar expansion is under way at another farm in Pisco, 45km away.

Agriculture is one of the pillars of the Peruvian economy, with exports up from $645mn in 2000 to $8.5bn last year. That represents 20 per cent of the country’s total exports, according to the central bank, and Chilean and US investment is rising.

The ministry of agriculture predicts that, by 2027 and assuming current growth rates, the country will overtake neighbouring Chile — where rights to water access are sold at private auction, making investment less attractive.

“We can manage all variables to the minimal detail regarding what the crop needs, which translates to good yields and a steady, high-quality fruit every time,” Casartelli says.

Alongside blueberries, the country is the world’s leading exporter of grapes and asparagus, together worth $2.5bn last year, and the third-largest exporter of avocados, as well as a big seller of mangoes and citrus fruits.

Economists say the country’s success is down to pro-market policies that have driven agriculture since the 1990s, when large-scale irrigation projects brought water from the eastern side of the Andes to Peru’s western coastal regions. Here, agriculture is focused near large ports, facilitating exports.

In addition, the exchange rate, set by the independent central bank, has been largely stable for two decades. Peru has free trade agreements with the US, the UK, the EU and 11 Asian countries, and a minimum wage that is competitive with Mexico’s, reining in labour costs.

Tony Salas, who runs ACM, an agribusiness consultancy, says that irrigating the coast under a project that began during the government of Alberto Fujimori in the 1990s converted the country into a “natural greenhouse”, allowing it to take advantage of its geography.

“With radiation and photosynthetic activity much higher than any other country in the world, thanks to Peru’s location so close to the equator, and the lack of rain along the coast, you get much higher crop yields,” Salas notes.

Government incentives also promote private investment. However, Gabriel Amaro, president of AGAP, Peru’s largest agricultural association, says challenges remain, despite “a consolidated industry” aided by technology and accumulated knowhow.

High fertiliser costs, because of the impact of the Ukraine war, as well as disrupted shipping and market instability from Covid-19 and climate change have hit agriculture — alongside local political instability. “We need stability within the government so that it can make decisions,” Amaro says.

Christian Barrantes, vice-minister of agriculture, admits that political instability could blight investor confidence. But he adds that the government is advancing with large-scale irrigation projects, including Chavimochic in the north and Majes-Siguas to the south, that, together, are expected to irrigate more than 200,000 hectares of land for agriculture. They are due to be completed within three years, opening up farmland in a further four years.

“We need to continue with those projects in order to expand water access and, ultimately, the amount of agricultural land,” Barrantes says.

Also bearing down is El Niño: the weather event that warms the eastern equatorial Pacific Ocean’s surface and causes global changes in temperature and rainfall. This is anticipated to affect agriculture in Peru’s north, where it is expected to bring heavy rains, and in the south, where drought is likely.

However, in spite of the challenges, Casartelli is confident that his blueberries will continue to thrive. “There are several new varieties coming from Peru in the next years,” he says. “It’s a big leap from what we used to produce.”