Although El Niño has been one of the worst on record, Peru appears to have got off relatively lightly compared to other countries in South America. Has this been Camposol’s experience?
JAG: El Niño has impacted production volumes in avocados, mangoes, asparagus and other products. It has also affected the quality of these products as the higher temperatures causes stress in the trees and this can speed up the ripening process and make fruit less resistant and therefore reduce its shelf life. The warm temperatures also cause excess humidity and rainfall and this can also affect quality as it increases the risk of fungus. Fortunately, we haven’t experienced heavy rainfall or flooding which can damage infrastructure.
Generally, however, 2015 has been a very positive year for the company and this is reflected in our end of year results. It has been a year of adjustments: the rapid expansion of previous years meant our administration and sales costs were too high but now they have come down and are more in line with the industry average.
Regarding individual products, the avocado season was considerably better than in 2014 while our blueberry campaign has been exceptional both in terms of product quality and the market, this being largely down to the lower output from Argentina and Chile.
What are your expectations for 2016?
JAG: We’re expecting avocado volumes to increase slightly on 2015, while in blueberries production will be significantly higher than last year. In fact, blueberries are set to become our leading product over the course of this year.
Are you enthusiastic about the agreement signed in December with Alibaba Group giving Peruvian exporters access to TMall and other leading online platforms?
JAG: We are due to visit Alibaba’s offices in March, at which point we will have a clearer idea of the potential these platforms offer.
There’s no doubt that China is going to be a hugely important market for Peru, Chile and Argentina in the coming decades. South America is the natural larder for this market as well as for most countries in the Northern Hemisphere. Peru has an abundance of virgin land, pure water and workers – all resources that are becoming increasingly rare in the Northern Hemisphere. In the case of China, the population is migrating from rural areas to cities and this is fuelling demand for natural and healthy foods. With food safety being a major issue within Chinese agriculture it follows that imports of fruits and vegetables is rising year after year.
In Camposol’s case, we see huge potential for avocados and blueberries in the Chinese market. But in order to avoid repeating past mistakes, it is vital to understand that China is a huge market, one that pays excellent prices but in turn is extremely fussy when it comes to quality and demanding certain specifications. Appearance is key – consumers judge a product with their eyes. If you send anything less than top quality it affects the whole industry.
How do you view the long-term outlook for Peruvian agriculture?
JAG: There are currently around 60,000 ha of fruit production dedicated to exports and over the coming years another 200,000 ha will become available thanks to large-scale irrigation projects. I think that the cost of agricultural land will come down in the future, and so too with the price of water – although this accounts for a low proportion of overall production costs. Labour is likely to be the one cost that continues to rise and to counter this, companies will have to find greater efficiencies in the field and in packhouses, both by improving their production processes and introducing a greater degree of automation.