Peru, an inherently agricultural nation, has thrived on producing and commercializing raw materials. The export of non-traditional products such as asparagus, grapes, and avocados marks the agrarian period. This has been facilitated by the country’s openness to international trade through free trade agreements and the increasing global demand for food. Between the 1950s and 1960s, notable exports, including cotton fiber, sugar and derivatives, rice, and wool, were attributed to irrigation projects along Peru’s coast.
Peru’s agro-export sector has become the second most profitable economic activity after mining, multiplying its profits nearly eightfold in non-traditional product exports (PROMPERU, 2016). In 2021, the country aimed to add and expand 350 thousand new hectares of cultivation, mainly for agro-export products, generating employment and foreign exchange (Vasquez, 2015 b). The Peruvian agribusiness system encompasses productive, industrial, export, and commercial activities, interconnected through products forming the agro-exportable supply along agri-food chains. However, the global food business faces significant economic, political, social, and environmental criticisms. (Pisani & Franceschetti,et al).
A Growing Agri-food Sector
Over the last two decades, Peru has emerged as a significant agri-food producer, experiencing a consistent annual growth rate of 18% to 20%, generating over $5 billion in yearly revenue. The agro-export sector represents 8% of the national Gross Domestic Product (GDP) and exhibits four times less productivity than other sectors (INEI, 2013). To diversify and sustain growth, leveraging the knowledge of key system actors is crucial. The agricultural inventory highlights the most productive crops, with potatoes, coffee, cocoa, avocado, grapes, asparagus, and mango being the standout performers. Noteworthy data includes 30% of the national territory being agricultural, with a total area of 38 million hectares, where the Sierra region accounts for 57.7% of the total farm area and 82% of agro-producers managing less than five hectares.
The Peruvian agri-food business has seen significant growth, with mangoes and strawberries being the main exports in the 1990s. However, by 2000, there was a surge in the export of citrus fruits, grapes, avocados, artichokes, paprika, and legumes. Post-2010, pomegranates, blueberries, peppers, bananas, mandarins, quinoa, and organic products like coffee and cocoa joined the export portfolio (PROMPERU, 2011). The current export market comprises four categories: functional or superfoods, nutrient-rich foods, and Andean grains like Quinoa, Kiwicha, and Cañihua. Other potential exports include organic ginger, pineapple, and natural colorants like cochineal and turmeric (PROMPERU, 2014).
Peru’s comparative advantages, including biodiversity, microclimates, and strategic location, enable high agricultural yields surpassing the global average. Despite these advantages, Peru faces significant challenges to remain competitive, such as improving road infrastructure, logistical services, financial credits, and environmental barriers. Peru has become a major global food producer, particularly in fruit and vegetable exports like strawberries, grapes, mangoes, artichokes, paprika, palms, and bananas (Meade et al., 2010; COMEX, 2016).
Peru’s agro-exports have grown substantially and diversified in recent decades, primarily due to the country’s gradual opening to international trade (Illescas & Jaramillo, 2011). The intricate Peruvian agri-food system comprises four sectors: agro-productive, agro-industrial, agro-export, and agro-commercial, interconnected through a cyclical sequence of development, product, process, strategy, and market—crucial for the agri-business system’s growth.
Peru produces high-quality fruits and vegetables with unique flavors, colors, and aromas, meeting quality control standards. The country contributes to the global food supply with a wide range of biodiversity, including globally recognized products like papaya and tomatoes. Peru boasts 84 out of the world’s 117 life zones, and its tropical and dry land provides natural winter conditions. The proximity to the Ecuadorian continent allows for greater solar intensity, enhancing photosynthesis, productivity, and crop quality. This location also enables Peruvian products to reach northern markets before their southern counterparts. Peru’s export-oriented agricultural sector has modernized, leveraging favorable natural conditions to upgrade processes and equip the country with necessary resources (PROMPERU- Trade Commission of Peru, Los Angeles).
Export Surge Spotlight
In 2019, Peru’s total exports to the U.S. reached $5.9 billion, a 26% decrease from 2018, primarily due to reduced gold exports to Canada. However, non-traditional exports increased by 7%, with the agro-industrial, chemical, and textile sectors boosting their exports. Peru exported 3,730 products to the U.S. in 2019, while U.S. imports increased by 83%, resulting in a U.S. surplus of $2.418 billion in 2019 (SUNAT- Aduanas).
Peru and the United States have a longstanding trade partnership. Before Covid-19, Peru’s non-traditional exports to the U.S. rose to $3.9 billion. Agricultural exports reached $2.5 billion, textiles $700 million, fish $220 million, and jewelry $100 million. Total exports, including metals and other vital products, reached $5.7 billion, compared to the $8.8 billion U.S. exports to Peru. These results are attributed to the implementation of the Peru-U.S. Trade Promotion Agreement 2009 (PROMPERU- Trade Commission of Peru, Los Angeles).
According to Betsaida Lozano, an agribusiness consultant, Peru’s agro-export sector has witnessed sustained growth in recent years, becoming a significant driver of the national economy. In 2022, Peru’s agricultural exports reached a value of $10.5 billion, a 1.4% increase from the previous year. Factors driving this growth include global demand for high-quality Peruvian agricultural products, opening new markets through trade agreements with other countries, and government initiatives to promote investment in the agriculture sector, enhancing the productivity and competitiveness of Peru’s agro-exports. It is projected that Peru’s agro-exports will continue to grow in the coming years, reaching a value of $11 billion in 2024. This growth is increasing the demand for fresh and processed products, the development of new markets such as India, the Middle East, and China, and support for innovation in the agricultural sector. Positioning Peru as a major agro-exporter in 2024, the country must align with these trends, improve its logistical infrastructure, strengthen partnerships with international buyers, and invest in research and development to create more productive and competitive agricultural products and processes (Lozano, 2023).
In light of this, Country Agribusiness endeavors to bring fresh and organic produce to American tables, free from pesticides and environmentally friendly, sourced from Peru’s diverse ecosystems. The company’s core objective is to supply safe and processed food, offering the finest Peruvian agro-industrial products to the United States, thus facilitating the integration of Peruvian and American markets. By doing so, they aim to contribute to the sustainable development of both nations, fostering economic growth and enhancing the well-being of local communities in Peru.
They aspire to become the premier marketer and distributor of Peruvian agro-industrial food of the highest quality in the U.S. market. With over 14 years of experience in the agribusiness sector, we assure and enable the provision of excellent-quality Peruvian agro-industrial products, bridging Peruvian markets with the U.S. market.
The company aims to establish a business model using raw materials from Peru’s biodiversity, contributing to improving the living conditions of local communities and engaging them in the value chain of their products. The sustainable growth of agro-exports and the 2009 free trade agreement between Peru and the United States have increased employment in Peru. However, to generate more jobs, Peru must invest more and produce more, requiring larger markets. About 15 of every 100 employed Peruvians depend on exports, making engaging in trade agreements or exports inevitable.
REFERENCES
AGEcon Search. El Sistema de Agronegocios en el Peru. www.ageconsearch.umn.edu
https://ageconsearch.umn.edu/record/281293/files/1.-%20Hellnani_Per%C3%BA.pdf
COMEX (Sociedad de Comercio Exterior del Perú). 2016. Estadísticas comerciales. Ene-Dic 2015. Revista Negocios Internacionales, 19(221):38-44.
https://www.comexperu.org.pe/busquedageneral?busqueda=§ion=revistas
Illescas, J. y F. Jaramillo. 2011. Export growth and diversification. The case of Peru. World Bank Policy Research Working Paper No. 5868. Washington: World Bank. www. openknowledge.worldbank.org, https://openknowledge.worldbank.org/entities/publication/af266d8c-d9e3-58d2-b84a-191d72780908
Lozano, Betsaida. “¿Cómo se posicionara el Peru como potencia agroexportadora en 2024?” 26 de Octubre del 2023.
https://www.linkedin.com/pulse/c%C3%B3mo-se-posicionar%C3%A1-el-per%C3%BA-como-potencia-en-2024-betsaida-lozano-rrioe/?originalSubdomain=es
Pisani, E. y G. Franceschetti, G. 2009. Evolución del pensamiento económico agrario. De los agronegocios a la nueva ruralidad.
Revista de la Facultad de Ciencias Agrarias, 41(2):85-108. https://mpra.ub.uni-muenchen.de/42810/
PROMPERU. Trade Commission of Peru, Los Angeles. https://perutradeoffice.us/
PROMPERU 2011 (Comisión de Promoción del Perú para la Exportación y el Turismo, Perú). 2011. Perú Productos agrícolas/Agricultural products. Lima: PROMPERU.
https://issuu.com/promperu/docs/catalogo_agro
PROMPERU. 2016. Desenvolvimiento del comercio exterior agroexportador. Informe Anual 2015. Lima: PROMPERU.
https://boletines.exportemos.pe/recursos/boletin/DESENVOLVIMIENTO%20AGROEXPORTADOR%202015%20compressed.pdf
Vásquez, K. 2015b. Olmos, nuevo centro de desarrollo agroexportador en el norte del país. Revista Moneda, 165(8):33-37. https://econpapers.repec.org/scripts/redir.pf?u=https%3A%2F%2Fwww.bcrp.gob.pe%2Fdocs%2FPublicaciones%2FRevista-Moneda%2Fmoneda-165%2Fmoneda-165-08.pdf;h=repec:rbp:moneda:moneda-165-08
ABOUT THE AUTHOR
Luis Henry Contreras Del Aguila
Food Industries Engineer Universidad Nacional Agraria de la Selva- Tingo Maria- Peru
Master in Agribusiness Administration ESAN University – Lima-Peru
Country Agribusiness CEO