Climate helps, infrastructure hurts Peru’s produce industry, USDA says
Peru’s climate, low labor costs and business-friendly environment have propelled it from a mineral exporter to a major Southern Hemisphere food producer, according to a special report on the country from the U.S. Department of Agriculture.
Foreign investment and trade agreements with the U.S., European Union and China have propelled Peru’s fresh produce sector since the 1990s. Its tropical climate is hospitable to year-round production, although growers and exporters are increasingly concerned about water shortages, the report said. Asparagus production, which is highly dependent on irrigation, is particularly vulnerable to shrinking water reserves. A large, unskilled labor supply has kept costs low, offsetting high transportation costs to Northern Hemisphere markets, according to the report.
More than 60% of the country’s agricultural exports are fruits and vegetables, with a value of US $1.2 billion, the report said. Asparagus is the largest single fresh produce export, though fruits such as grapes, mangoes and avocados have come on strong in the last few years. The European Union is Peru’s largest export market, taking in 44% of shipments, followed by the U.S., which receives 40%, according to the report.
This concentration of exports to a small number of markets is one of the challenges Peru faces. The country is looking to diversify the number of crops exported and the markets where they will go. Transportation also poses obstacles. Peru’s internal infrastructure of roads and ports is insufficient to accommodate the burgeoning agriculture industry, and the government is working to improve it. According to the report, 32% of product value is transportation, while it is 18% in Chile and 9.5% in the U.S., the report said.