Renato Nagaro spends his days carefully checking hectare
after hectare of blueberry crops on a farm along
Peru’s northern coast. A few years ago "I would
have laughed if someone told me I would be working with
blueberries," says Nagaro, farm manager for a joint venture
between US-based Agro Vision and Chile’s Frusan.
"It is an entirely new experience."
Blueberries are new not only for Nagaro, but for Peru as
whole. From a few test plots that brought in just $32,400 in
2010, according to the Peruvian Association of Exporters
(ADEX), blueberries became Peru’s fastest-growing
agricultural export last year, with export earnings amounting
to $237 million.
Blueberries are just one in a basket of crops fueling an
agriculture boom in Peru, driving investment and boosting
earnings. Agricultural exports reached $5.5 billion last year.
Agricultural products are the country’s
second-largest source of export income after metals, and
President Pedro Pablo Kuczynski’s administration
forecasts another 14% jump this year.
Why is agriculture, an ancient endeavor, suddenly booming in
Peru? The answers lie in a combination of factors, including
investments by local and international agribusinesses,
widespread irrigation that has made great swaths of land arable
and free-trade agreements with most of the world’s
The Peruvian coast is a long desert strip, punctuated by
river valleys. It has a temperate climate with abundant
sunlight year round. "You don’t have extremes, no
hot summers and no cold winters. It is like a greenhouse that
you can control," says Alfonso Altet, business development
manager for Agro Vision.
A particular Peruvian advantage is the ability to time crops
to take advantage of windows when countries in the northern
hemisphere are not producing and southern hemisphere neighbors
are just starting to ramp up harvests. "In the middle of winter
in the US, it is the height of production here. And we have
low-cost production. Those are two advantages that make Peru
competitive," says Agro Vision chief executive Thomas
This is especially the case with recently introduced crops
such as asparagus and blueberries. Nagaro describes an army of
workers who work in the fields each day of the off-season to
pull flowers off bushes. This prevents the blueberries from
producing until September, when US harvests are mainly over and
Chile, the big grower in the southern hemisphere, is not yet
"Peru is counter-seasonal to the US market," adds Joseph
Bormann, an analyst at Fitch Ratings. "So once Peru was able to
grow enough fruits and vegetables for export, it makes perfect
sense that you would see rapid growth, particularly from
markets like China, Japan and the US."
What was missing from the Peruvian formula was water.
Despite torrential El Niño rains that fell in the first
quarter of this year, the Peruvian coast typically gets almost
no rain. But in recent years, massive new irrigation projects
have opened up great expanses of new farmlands. Northern coast
projects include the Olmos in Lambayeque, which has added
38,000 hectares, and the Chavimochic in La Libertad, currently
in its third stage of development, which will add another
63,000 hectares to the 46,000 hectares already opened by the
project. A third project, Majes Siguas II, is slated to add
38,500 hectares in the southern Arequipa region.
Peru’s Central Bank estimates that Olmos will
add $600 million to export earnings, while Chavimochic will add
$1.2 billion to the $1 billion in exports already coming from
the project, and Majes Siguas II will increase exports by close
to $1 billion when operational.
Agro Vision has grown its Olmos footprint from just 254
hectares in 2016 to 2,000 hectares, with plans to add 329
hectares this year. Beyond blueberries, the company exports
grapes, and has planted asparagus and avocados, with an
investment averaging $38,000 per hectare. Agro Vision has also
acquired 12,000 hectares in neighboring Morope, where it
completed an environmental impact assessment and began drilling
wells for irrigation. It has 150 hectares of asparagus planted
"The addition of irrigated lands and new agro-export crops
are definitely attracting interest from international investors
as well as local investors who are looking at value-added
opportunities," says Paula Carrión, director of
ADEX’s agro-export unit.
While authorities are confident that the irrigation ventures
will meet estimates, problems have arisen. The Olmos project
was built by Brazil’s Odebrecht, which is
currently under intense legal and financial strain after
admitting to corruption at home and in many Latin American
countries, including Peru. A December 2016 plea bargain in the
US indicated the company paid $29 million in bribes to secure
contracts in Peru between 2005 and 2014.
Odebrecht attempted to sell the Olmos project earlier this
year to a joint venture formed by Canada’s
Brookfield and France’s Suez, but the Lambayeque
regional government rejected the sale, arguing that it could
not go through while corruption investigations are ongoing.
Snyder says Odebrecht’s problems are not
disrupting Olmos because all the lands have been sold and
Odebrecht’s local subsidiary, H2Olmos, has
committed to maintaining the irrigation system. "We
don’t expect any problems," he says.
A different scenario faces Chavimochic, where Odebrecht and
Peru’s Graña y Montero, a local
construction company, won the concession in 2013. The $715
million third stage has been delayed, with the companies unable
to reach financial close. President Kuczynski said at a press
conference in March that the Chavimochic impasse would be
resolved within a few months and that work should be completed
within the 2018 deadline, indicating that several Asian and
European companies, which he did not name, had expressed
interest in taking over the work.
After more than a decade in the planning stages,
construction on Majes Siguas II began in late 2016. The
Arequipa regional government, which is overseeing the project,
faces some opposition from local farmers. They say the plan to
sell plots starting at 200 hectares makes it impossible for
them to acquire land.
Juan Carlos Barberena, who heads an environmental group in
Huancarqui, a small town near Majes Siguas II, says the
project, like Olmos, will not benefit local residents. "There
could be a positive impact during the construction phase, with
some jobs, but once it is done it is going to benefit large
companies and not the people who live here. That is always the
case with these kinds of projects," he says.
The road to exports in Peru has largely
been paved with free-trade agreements signed
with most of the world’s major economies since the
start of the decade. The country has implemented 16 trade
agreements since the watershed pact with the US in February
2009. More than 90% of Peru’s $36.8 billion in
2016 exports were covered by free-trade agreements, according
to the Mincetur. The central bank put the
country’s trade surplus at $1.7 billion in 2016
and just shy of $4 billion for this year. Agricultural exports
reached 98 countries in January, according to the most recent
data from the Agriculture and Irrigation Ministry. Still, Peru
is not finished with its trade talks. It has been in
negotiations with Turkey since 2014, and talks are scheduled to
begin in June with India. The deal will represent
India’s first "next generation" trade agreement in
Latin America and will include not only goods and services, but
also investment parameters.
"India is going to be an important market for us," says
Trade and Tourism Minister Eduardo Ferreyros. "We see
tremendous potential for agriculture, fruit, vegetables and
grains in a market with more than 1 billion people."
The government, in the meantime, has been working to perfect
existing agreements by eliminating non-tariff barriers,
particularly phytosanitary inspections that deem shipments free
of harmful pests and plant diseases. Last year, it got
pomegranates and figs added to the list of products entering
the US, which, Mincetur says, will add another $80 million to
It has negotiated five separate phytosanitary protocols with
China since the free-trade agreement was implemented in 2010.
The first air shipment of blueberries was dispatched last
November, while the first shipment by sea arrived in Guangzhou,
China, at the end of February.
"Free-trade agreements have opened new markets, giving Peru
comparative advantages that other countries in the same
position do not enjoy. Trade agreements are also important to
investors, because they provide clear rules that are
respected," Carrión says.
Pointing to last year’s $5.5 billion in
agricultural exports, Ferreyros adds, "We need to be ambitious.
We should think not about doubling agro-exports, but aim much
higher. I see no reason for us not to see $20 billion as a