PERU
The third largest country by land area in South America after Brazil and Argentina, Peru emerged from a torrid time in the 1980s, due to civil disturbance, to set itself on a path for growth by the 1990s. By the 2000s, the dividend of those reforms was starting to be paid and agricultural exports grew at an average annual rate of 12.5 percent between 2000 and 2016, according to a 2017 World Bank study entitled Gaining momentum in Peruvian agriculture: Opportunities to increase productivity and enhance competitiveness. The foundations of this turnaround can be found in the structural reforms undertaken during the period 1990-1997, which included trade liberalization and reforms of the financial, labour market and industry, fiscal and business, states the report.
The urbanization pattern in Peru is atypical, according to the World Bank, with an extremely large share (41 percent) of the urban population concentrated in one city – the capital Lima.
Agriculture and GDP Agriculture forms around five percent of Peru’s GDP, and has remained around five to seven percent even with GDP growth from the 1990s. In many other countries the general trend is for the contribution of agriculture to decline, but as will be seen, a distinguishing feature of Peru’s growth is a growth in agricultural export markets. Between 2000 and 2013, the agricultural sector of Peru grew in real terms at an average annual rate of 3.3 percent, according to the World Bank, and since other sectors grew even faster, the agriculture sector reduced slightly as a percentage of overall GDP. Mining, for example, is a key sector in Peru’s economy. Although Peru does not have much domestic production of fertilizer, it has a phosphate mine in Bayovar, which began production in 2010.
Table 1: Country and land use data summary
Agriculture remains a large employer of the population, with estimates at 25 percent. This is more than many other urbanized economies in the region, notes the World Bank.
There are three major geographical regions in Peru (see map). The Costa region accounts for the largest share of agricultural GDP (44 percent) from around 23 percent of the country’s agricultural land and is the major region for export crop production. The Sierra region contributes 42 percent of total agricultural GDP, containing 39 percent of the country’s land, while the Selva region contributes 14 percent of agricultural GDP, from 38 percent of agricultural land.
Chart 1: Peru GDP growth
Source: World Bank
Agricultural investment The growth in agricultural exports has been achieved with relatively low investment on agriculture as a percentage of GDP, according to the World Bank. A review the World Bank conducted in 2012 found that spending in agriculture expressed as a percentage of GDP remained low throughout the 2000-2010 period, starting at 0.7 percent, dipping to 0.3 percent and ending at 0.6 percent. Having made gains through importing technology, and decreasing the yield gap, the World Bank said in its 2017 report that the next step is for Peru to harness its own domestic innovation. The Instituto Nacional de Innovación Agraria (INIA) was cited as the agency to support investments in agricultural innovation.
The export boom in the Costa region has led to the development of new financial institutions targeting the agricultural sector. This region has a functioning land market, with a degree of liquidity that is not really seen in other parts of the country.
Farm structure The 2012 census noted 80 percent of agricultural units were less than five hectares (ha), and the World Bank report described a number of these holdings as low input/low output. Post-harvest infrastructure has failed to keep up with the rapidly growing cities, notes the World Bank, adversely affecting the quality and safety of food and contributing to enormous losses. This would seem to present an opportunity for biological companies.
Trade growth A distinguishing feature of Peru’s growth has been an orientation towards export markets. Agricultural exports increased in value from USD$758 million in 2000 to $5.78 billion in 2016, growing at an average annual rate of 12.5 percent (Ref 1).
The increase is partly a result of an increased product range for exports, driven by non-traditional crops, as much as increased volume. In 2005 there were 1,144 exporting firms in Peru, states the World Bank report. By 2012, the number had grown to 1,738, of which 77 percent were either micro or small enterprises. And by 2015 it had reached 2,017. Traditional crops have still seen an increase. For example, between 2006 and 2014, exports of coffee, sugar and wool increased in real value, growing from $574 million to $840 million. “During the same period, exports of non-traditional products, including grapes, asparagus, avocado and other fruits, grew at an even faster rate” (Ref 1). In terms of overall value, coffee remains the most economically important export; the value of coffee exports increased in real terms from $223 million in 2000 to $756 million in 2016. To highlight the growth in other crops, the share of coffee in total agricultural exports dropped from 28.5 percent in 2000 to 13 percent in 2016 (Ref 1).
Export destinations - flat From 2004, Peru has achieved net surpluses, not necessarily consistently, in its agricultural trade (Chart 2). Peru still needs to import foodstuffs, notably rice, which is covered in a later discussion.
In term of exports, the number of destinations rose from 99 countries in 2000 to 142 countries in 2016. But the diversification of destinations has been a challenge: in 2000, around 75 percent of all agricultural exports went to nine countries; in 2016, 75.5 percent went to 10 countries (Ref 1). The U.S. was the leading destination, receiving around 30 percent in 2016, followed by European countries, in part facilitated by a trade deal with member states of the European Union in 2013 (which was also jointly done with Colombia). In 2016, the Netherlands was the largest recipient at 14 percent (although this might include the Rotterdam Effect, where goods arrive into the port of Rotterdam but are bound for other final destinations). Exports to other Latin American countries are relatively low. Production trends Despite the growth in exported cash crops, the allocation of land to major crops remains roughly the same. Coffee, maize, potatoes and rice remain unchanged at just under 50 percent of total area harvested, notes the World Bank report. However, it is high-value export commodities where the change has been notable (see Table 2) and the contribution to agricultural GDP . Permanent crops have increased in the Selva region, replacing annual crops. Harvested annual crops have fallen by 190,000 ha while permanent crops have increased by 500,000 ha. The Sierra region has seen 109,000 ha transfer from annual crops to pasture. In the Costa region, the area
under annual crops has expanded, but the area under permanent crops has expanded more rapidly. Production output The distinct regions within Peru account for the variations in production. The Costa region is highly productive and well situated for the ports for export. Among the Selva and Sierra regions there are variations in productivity. The main field crops are rice, potato, maize, beans, quinoa, onion and garlic. The main industrial crop is cotton. There is wheat production, but it is lower than the other crops (see Table 3) at around 240,000 tonnes per year (t/yr) (USDA).
Potato volume Potatoes are the largest crop by volume and, famously, Peru has many varieties that have been grown for millennia. Potato production is 5.2 million tonnes (t). Yields of 15-16 t/ha would still be well below regional comparisons with Brazil (31 t/ha) and Argentina (32 t/ha). But despite lower yields it remains the dominant potato producer in Latin America. Brazil produces around 3.7 million t, and Argentina 2.3 million t (Our World in Data, 2018).
Rice production After potatoes, rice (arroz cáscara – paddy rice) is the next dominant field crop with around 400,000 ha planted. Rice production for 2020 was given as 3.4 million t (Ref 2) but milled rice is around 2.2 million t (USDA). The peak production months are April through July, with August to November being the lowest months of the year (see Chart 3).
Chart 3: Rice production in Peru by months
Source: MIDAGRI
Using the USDA figure, rice yields appear to be around 5.5 t/ha, which is slightly higher than Brazil or Argentina (around 5 t/ha) according to Our World in Data figures (2018 data).
A report from CIAT (International Center for Tropical Agriculture) said some varieties had been introduced to Peru since 2014 that offered yields up to 15 t/ha, and perhaps that is contributing to the higher average yield based on this data. Rice consumption per capita is 76 kilograms per capita (kg/capita) (Our World in Data) and with 32.5 million people, gives a theoretical consumption of 2.5 million t and according to USDA figures for marketing year 2019-20, milled rice production was 2.2 million t. Imports are therefore required to fulfil consumption, and the USDA forecast imports of 300,000 for marketing year 2019-20, which fits with these numbers. The USDA says Uruguay is the main supplier of rice to Peru, followed by Brazil and Thailand. In terms of area, the various varieties of maize dominate with around 500,000 ha planted, and covering yellow maize, starch maize (amiláceo), and maize (choclo). Peru does not produce enough corn to satisfy the growing demand of its feed industry, particularly the poultry sector.
Quinoa – super food Peru is one of the largest producers in the world of quinoa, vying for the top spot with Bolivia. Quinoa has increased in popularity being marketed as a healthy food. With 90,000 t of production, this is just over half of global production, currently around 160,000 t, according to Statista website. The area harvested has grown from
19,000 ha in 1995 to 69,000 ha in 2015 (Ref 1), an increase of 270 percent.
Coffee boost Planted coffee area doubled in 25 years up to 2015, reaching around 380,000 ha (Ref 1/MIDAGRI 2017). Peru is one of the world’s second-leading exporters of organic coffee. “It emerged to take advantage of the fact that most producers used low levels of chemical fertilizers and pesticides because they could not afford them” (Ref 1). Coffee production in Peru is concentrated in three main growing areas: Amazonas and San Martin regions in the north are the largest, with the Junin Region also significant. Coffee production is around 340,000 t, with a yield of 0.91 t/ha. By comparison, Brazil is 1.91 t/ha, China 2.96 t/ha. Bolivia (0.90 t/ha) and Colombia (0.93 t/ha) have similar coffee yields to Peru at 0.9 t/ha (Our World in Data 2018).
Cocoa area increasing The cocoa area started to rise in the 2000s, from 50,000 ha in 2005 to 121,000 in 2015. According to the World Bank, cocoa production involves around 50,000 farmers. San Martin is the largest producing region, with other key regions being Amazonas, Ayacucho, Cusco, Cajamarca, Huanuco and Junin.
Organic bananas Peru is a major producer of organic banana producers. Exports worth $100 million or more are generated on 8,500 ha by 7,500 small scale producers and 46 producer-based associations. Nearly all of Peru’s banana exports are organic and form around four percent of the banana producing area (FAO). “Smallholder productivity is low, mainly because the underdeveloped input markets make it difficult to obtain good plant material and nitrogen-rich fertilizers” (Ref 1). As seen in Table 3, banana volume was about 2,280,900 t in 2020, giving a yield of 13.58 t/ha. The Our World in Data figure was 16.6 t/ha, so a figure that supports this level. Ecuador is higher at 40.26 t/ha, and Nicaragua would be highest in Central and South America at 64.72 t/ha.
Asparagus and artichoke Peru is a major exporter of asparagus with production volumes at 370,000 t/yr. As can be seen from Table 2, the area has grown from 20,000 ha in 1995 to 34,000 ha in 2015. The artichoke area has also risen sharply, to 5,000 ha in 2015, up from 300 ha in 1995.
Avocados, grapes, mango The export growth in avocados, grapes and mango can be seen in the growth in harvested area (see Table 2). Of the share of total area for field crops, these three crops account for around four percent, yet they account for 4.7 percent of agricultural GDP in 2015. Quinoa formed three percent of area and formed 0.4 percent of agricultural GDP. This highlights the strong contribution those three products (avocados, grapes and mango) make to the agricultural GDP per hectare. The World Bank made the point in its report: “In 2015, nine percent of agricultural value added was generated on only 235,000 ha through the production of high-value vegetables, compared to the 13.5 percent of agricultural value added generated on 1.2 million ha planted to cereals.” This can be seen in Table 2. Not all cereals are shown but maize, rice and quinoa total 981,000 ha. It should be noted that quinoa is sometimes referred to as a pseudo cereal. The high-value crops being referred to in that quotation are asparagus, artichoke, avocados, grapes and mango.
Provincial production In terms of regional production, for potato, the two largest provinces by area are Puno (about 60,000 ha) and Huánuco (about 40,000 ha). These two provinces form around 28 percent of the 350,000 ha of potato planted by country.
Rice is sown across around 410,000 ha. The largest planting takes place October to March of around 240,000 ha (Ref 2). The largest province for rice is San Martín with around 100,000 ha, roughly one-quarter of the country’s area. Piura, Lambayeque and Amazonas are large rice growing regions too (see map). When it comes to maize, there are four main varieties shown in the MIDAGRI data: • Hard yellow maize - Maíz amarillo duro – has an area of around 270,000 ha, with production of around one million tonnes. The main provinces are San Martín with 43,000 ha, around 16 percent of area (Ref 1), Loreto with 13 percent and Lambayeque with 10 percent. • Maíz amiláceo – or starchy maize used for corn flour – has a slightly lower area at 210,000 ha, and production at 280,000 t. The main growing province for this variety is Cajamarca at 39,000 ha or 19 percent, Cusco with around 12 percent and Apurímac with a similar percentage. • Maíz choclo – this white corn is grown across 45,000 ha. The high yield of around 400,000 t/yr is explained by the fact that this is often referred to as “giant corn”. The white kernel is heavier than standard maize. Cajamarca is the largest province with around 20 percent, followed by Junín, Ancash and Lambayeque. • Maíz morado is the fourth variety. Morado is Spanish for purple. Volumes of this distinctive crop are much lower than the other varieties.
Frijol grano seco – dried beans – are grown across 87,000 ha. One-fifth of the dried bean area is found in Cajamarca, with 20,000 ha. For quinoa, the main growing provinces are Puno with around half of the area, followed by Ayacucho (22 percent) and Apurímac (eight percent). Cotton is Peru’s largest industrial crop, grown on around 20,000 ha. Around half of that area is in Ica, with other large growing provinces being Piura, Lambayeque and Ancash. Onion is grown on around 15,000 ha. Around half of the area is in Arequipa province. Garlic is going on around 9,000 ha with half the area in Arequipa, followed by Lima province (20 percent).
Biological companies Given the large grape production in Peru, it’s unsurprising that we see biological products to control disease in this crop, such as biofungicides. In July 2020, the National Agrarian Health Service of Peru (Senasa) launched a promotion for the use of biological control agents to make pest control more sustainable in crops prioritized such as vines, cocoa, sugarcane, avocado, citrus, asparagus, coffee and others. Senasa grants a Green Fund Certification to those who produce food for national consumption free of agrochemicals through implementation of biological control. In 2019-20, 625 users interested in the breeding and production of biologicals were trained on the back of agreements with private companies and state institutions serving crops for domestic and export consumption, including corn, potatoes, rice, beans, citrus, asparagus, avocado, blueberry, artichoke and vine crops.
Fertilizer Consumption The national average fertilizer application rate of 112 kg/ha is lower than many regional countries, according to World Bank data. Like a national figure, there will be regional variability within it. Fertilizer usage is higher in the Costa region and lowest in the Selva region. In 2012, it was estimated that 44 pecent of farmers used fertilizer, but the number who applied it optimally was lower and estimated at 11 percent (Ref 1).
Phosphate mine at Bayovar, Peru
Peru is heavily reliant on fertilizer imports, but it does have a phosphate open pit mine at Bayovar, in the Piura province, which began production in 2010 to export phosphate rock. A new terminal was supplied with a belt and conveying system by Taim Weser. The image is from Taim Weser website. The terminal can load ships with 20,000-75,000 DWT capacity.
Irrigation The Costa region receives very low rainfall, so agriculture is dependent on irrigation. The Sierra region receives its highest rainfall between December and March and tends to require irrigation in the dryer months. The Selva receives high rainfall throughout the year. The area for irrigation has steadily increased over the years. According to the 2012 census, the most recently cited in the 2017 World Bank report, it was estimated that approximately 2.6 million ha had been developed for irrigation. In the Costa region, 1.5 million ha is irrigated, representing 87 percent of the cultivated area. The Sierra region has around 990,000 ha of irrigated area, representing 30 percent of cultivated land. In the Selva region, it is around 121,000 ha area irrigated or six percent of cultivated region. ●
Fertilizer consumption and use in Peru: perspectives of growth and challenges for local production
Sady García Bendezú, Professor, Department of Soil Science, Universidad Nacional Agraria La Molina Lima, Peru
The topographic and climatic conditions imposed by the Andean mountain range make Peru a country with little arable land. Nonetheless, the cultivated area has increased from 15 percent to 18 percent during the last 30 years, mainly due to the development of irrigation projects on the coast and of industrial crops in the Amazon forest. The expansion of fruit and vegetable crops in the irrigated coastal drylands has placed Peru among the main world exporters of table grapes, blueberries, avocados, asparagus and mangos. The case of blueberries is particularly interesting: during 2020, Peru was the largest global exporter of a crop practically not cultivated a decade ago. The boom of fruit exportation has been accompanied by an increase in the use of fertilizers. Average national consumption increased to 125 kg/ha/yr during 2011-2020, compared to 84 kg/ha/yr during the previous decade, but is still under the world average. According to the last national census, only 45 percent of farmers reported to use inorganic fertilizers, and only 22 percent reported to use them in sufficient rates. As average doses have not changed in most food crops, the exportation is mainly responsible for the increase in fertilizer consumption, and it is expected that this trend will continue during the current decade. Agriculture in Peru is strongly dependent on imported inorganic fertilizers. The use of fertilizers in Peru during the period 2014-2018 averaged 1.5 Mt/year. From this amount, nitrogen fertilizers represented 63 percent, phosphate fertilizers 0.2 percent, potassium fertilizers 11.8 percent, and complex (binary or NPK), represented 24.5
percent. Urea, ammonium nitrate, diammonium phosphate and potassium sulphate are the most consumed fertilizers. The main providers are Russia, Chile, China, U.S. and Canada. The market of micronutrients and specialized fertilizers is still small in Peru, but it is steadily growing, and it is expected that they could cover around 35 percent of the nutrient requirements by 2022. The dependence on imported fertilizers can endanger both the food security and the economic growth of Peru; thus, the need of developing a local fertilizer industry is becoming urgent. There is a long experience in producing ammonium nitrate, but it is mostly oriented to satisfy the need of explosives for mining. The price regulation practised during the 1980s and 1990s discouraged the local industry to produce fertilizer-grade ammonium nitrate. One of the main constraints for local production of nitrogen fertilizers is the high cost of energy, but this scenario can improve through the exploitation of natural gas reserves in Camisea (Cusco). Peru has proven phosphate reserves equivalent to 210 Mt of concentrated 30 percent P2O5 rock phosphate. Some estimates indicate probable reserves 10 times higher. The mining capacity is approximately four Mt/year, but it is mostly sold as concentrated rock. Peru had an industry of single superphosphate (SSP) and some companies produce partially acidulated phosphate rock as fertilizer, but the production of phosphoric acid and complex fertilizers will also require the use of gas reserves from Camisea and Talara (Piura). Potassium brines (mainly as sylvinite) have recently been found in the vicinity of phosphate deposits, although the richness and volume have not been estimated. On top of hydrocarbons, the coast of Peru has a high potential for generating electric energy from wind and solar sources, which are more expensive to implement but much cheaper to maintain. Using this potential can help to close the energy gap that has postponed the development of local fertilizer industry. The market of organic amendments and biofertilizers is also constantly increasing in the country. Poultry production has been increasing during the current century, resulting in the production of 0.5-0.6 Mt of manure (including litter), 90 percent of which is produced in the coast and is mostly used in horticultural crops. Several efforts are being undertaken to develop improved organic amendments to satisfy the demands of both conventional and organic production. Biofertilizers based on microorganism are increasingly being used, and formulations containing nitrogen fixers, phosphate solubilizers, pathogen antagonists and mycorrhizae, can be easily found in the market. As a conclusion, the use of fertilizers in Peru will continue growing, and it will be necessary to join the efforts of public and private sectors to invest in local production, aiming for more sustainable crop production. ●
The 2017 World Bank report concluded: “Over the next 10-20 years, the contribution of agriculture to the economy of Peru will remain significant.” Considering Peru has very little of its own domestic fertilizer production, it is notable that it has gained such a strong position in export markets of high-value crops. This is particularly the case for blueberries which were not really cultivated a decade ago, according to Professor Bendezú. The lack of incumbent producers might have been to Peru’s advantage, and perhaps enabled higher quality fertilizers to arrive in greater volume and accelerate the development of the sector.
In general, there appears an opportunity for fertilizer consumption to grow, and biologicals have a foothold that could increase, as attested by Professor Bendezú in his contribution. Peru’s export growth has been driven by non-traditional crops. However, the coffee area has doubled in 25 years up to 2015, and global consumption shows no sign of diminishing, so this could be a crop that continues to expand its area and offer opportunities for inputs. In terms of export destinations, it was highlighted that the number of partner companies has remained flat and that could be expanded. Yields on some crops could also be increased, such as banana. With organic banana, the incidence of black sigatoka is low, according to the FAO, but if this changed then it could provide a requirement for biocontrol. Post-harvest improvement was cited by the World Bank in its report, and this could provide further opportunity for biocontrol suppliers. As well as agronomic challenges, topography provides a challenge of its own, increasing costs of delivering goods and services, and contributing to disparities between the regions. The Sierra and Selva regions are difficult to traverse, and this increases transport and logistics costs. This might be one sector that receives investment in the next decade. ●
Over the next 10–20 years, the contribution of agriculture to the economy of Peru will remain significant.
The geography of Peru is divided into three distinct regions: Costa, Sierra and Selva. The Andean cordillera provides a natural boundary. In the west is the coastal region known as Costa. These are arid plains, areas of high agricultural production, and also home to around 57 percent of the population (Ref 1). The capital Lima is situated in the Costa region. The Sierra is the highlands, home to around 31 percent of the population. The Selva is low-lying Amazon rainforest representing 60 percent of the land surface and only three percent of the population.
Agricultural provinces in Peru
The three geographical regions of Peru
Reference 1 World Bank, 2017. Gaining momentum in Peruvian agriculture: Opportunities to increase productivity and enhance competitiveness. Washington, DC: World Bank.
Reference 2 Peru Ministerio de Agricultura y Riego (MIDAGRI) Encuesta Nacional de Intenciones de Siembra 2019 Lima, Junio 2019
Peru Ministerio de Agricultura y Riego (MIDAGRI) - datawww.gob.pe/midagri
World Bank data Our World in Data - crop yields and rice consumption per capita ●
Chart 2: Growth of Peru’s agricultural exports
Table 2: Crop expansion in Peru 1995-2015
Source: Reference 1 / *New AG International
Table 3: Production (tonnes) of Peru’s major crops in 2020
Table 3 shows the major crops by production volume. The planted area for field crops ranges between 1.8-2.1 million ha.
The first efforts to diversify from Peru’s traditional commodities of coffee, cocoa, sugar and cotton began in the mid-1980s beginning with asparagus.
Agriculture remains a large employer of the population, with estimates at 25 percent.
Maíz choclo, also known as giant corn, is grown in Peru and has large white kernels.
Table 4: Selection of biological companies active in Peru
Pampa de la Culebra Cajamarca, Sierra Region, Peru
