Peru is one of the rapidly rising stars of the fresh produce world. The South American country is seeing impressive growth in the production and export of fruit and vegetables to match the burgeoning economic success of the nation itself.
The country has overcome political and infrastructure difficulties in the recent past and is now seeing strong growth across a number of fresh
produce lines. Agriculture ministry Minag last month identified 22 products that make up 42 per cent of Peru’s agricultural revenue and cover some 2.18 million hectares, a figure that has risen 3.3 per cent on the previous year.
The list includes potatoes, sweetcorn, onions, green beans, sweet potatoes, squash, carrots, tomatoes and garlic, though within that group some crops have risen and others fallen. Overall though, the picture is one of impressive agricultural growth.
With the US market increasingly opening up to Peruvian imports, an interesting dynamic is emerging within the production sector as growers switch out of traditional asparagus production and into ‘newer’ and more high-margin products such as pomegranates, grapes, avocados and even blueberries.
With asparagus production being around a 15-year commitment and many crops coming to the end of that cycle, many growers are reconsidering what the most profitable lines will be for them going forward. An added complication is that asparagus land cannot be immediately replanted with the same crop, according to a source in the country, which means farmers having to find new land.
“If you look at the export statistics the [asparagus] industry in Peru has grown year on year, but then in 2011 there was no growth and this year there was 20 per cent less crop than last,” he explains.
On a global scale the picture is a little more complicated than just growers switching into other crops. With lower output in China and other key producing areas the canned and frozen markets have been buying up larger volumes of the global asparagus crop, which is leading to a general tightening of supplies. The combination of factors is likely to mean consumers having to pay higher prices for asparagus in the coming years.
What the situation does illustrate, from a Peruvian perspective, is the burgeoning portfolio of other crops available in the country, a reflection both of its favourable climate and fertile soils. It underlines the fact that there are a wide range of newer crops coming on stream that had not been grown in large quantities before.
One company building strong sales of Peruvian lines in the UK is Pacific Produce, a grower-owned business set up in January 2011 to offer an efficient route to market for its growers.
The firm specialises in citrus such as satsumas, clementines, mandarins and minneolas, but also has a wider portfolio that includes grapefruit, butternut squash, avocado, grapes and pomegranates.
Pacific Produce farmer La Calera is one of the largest agricultural producers in Peru, with over 1,000ha in Chincha in the south of the country. The family-owned business is the largest citrus and egg producer in Peru, and has established well-known trade brand names such as Gold Cup.
Robert Cullum, who runs the Pacific Produce office in the UK, says: “There’s no doubt Peru has really opened up and people are wiling to invest. It’s really taking its place on the map.”
The favourable climate of dry conditions, but with adequate water resources and stable temperatures, make the country ideal for growing, according to Cullum. And La Calera has backed those natural geographical advantages with heavy investment over the last decade in packhouse facilities, biodigestors and extensive work in social facilities such as constructing a school and even a small town (see box).
A sign of Peru’s growing importance in the UK, Barfoots of Botley established an office in the Andean country at the end of 2011 to ensure it had its own people permanently stationed on the ground. Rossana Muñoz, an experienced industry figure who has also worked in the airline sector, has been employed specifically to help the company gain more visibility and control in its supply chain in a country that represents a large proportion of Barfoots’ imports. With a six-hour time difference to the UK and a greater emphasis on close relationships with growers, the move made sense.
“Peru has become a critical supply source for us,” explains Juan-Carlos Leon, the company’s supply chain director. “Three years ago we decided that rather than doing CPT (Carriage Paid To) London we would manage the airfreight side of things ourselves, so we established direct relationships with airlines as that can be as much as 50 per cent of the cost. Asparagus can be very sensitive to temperature so we wanted to bring that more under our control.”
Barfoots is now flying via New York, where it has established its own cool facilities to ensure product reaches the UK in the best condition possible. And the move to establish its own Peruvian office is a further step in vertically integrating its supply chain. The company is also trialling chillies for the UK market, as well as sugarsnap peas and mangetout.
Other major suppliers, such as Camposol, are also upbeat about the long-term forecast for Peruvian growth. The company last month reported a 34.5 per cent sales increase in the second quarter to $40m on the back of higher volumes and prices. And for the future Camposol predicted excellent prospects for exotic fruit and vegetables in particular, with avocados and mangoes set for strong growth.
Its outlook reflects that of Peru generally - a nation belying the global economic crisis to position itself at the forefront of fresh produce supply. -
SOCIALLY MINDED
When Peru was hit by a devastating earthquake in August 2007, over 500 people were killed and thousands more displaced.
La Calera stepped in and built 1,000 temporary shelters, and two years later - after further inaction by local authorities - it went a stage further and set up CasaGrande SAC (Big House), a non-profit company dedicated to building homes for its workers. It then set about building some 514 houses for workers between 2009-11, which it sold at a subsidised price of between $2,000 and $3,000.
Among the many other social initiatives the company has put into place are health and birth control programmes; five per cent of net profits paid to staff as bonuses; and the creation of Pro-Laran, an NGO aimed at helping the town of Alto Laran.
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