Debunking the myths of Chile's role in Peruvian horticulture - FreshFruitPortal.com

Debunking the myths of Chile's role in Peruvian horticulture

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Debunking the myths of Chile's role in Peruvian horticulture

Despite the common perception that Chilean investors are putting loads of money into Peruvian horticulture, industry insiders say there are simply more Chilean professionals working across the border. Capital on the other hand is a different matter, says Inform@cción president Fernando Cillóniz.

Cillóniz has told www.freshfruitportal.com that Chilean investment in Peruvian agriculture was still 'incipient', but the leading players are mainly driven by local capital.

"Capital in the Peruvian fruit industry is, almost totally, Peruvian, such as Camposol, Agroindustrial Beta, Agrokasa, El Pedregal, etcetera," he says.

"I have understood that only in the last two years have some major Chilean companies been entering the Peruvian fruit industry."

H2Olmos Odebrecht commercial manager Alfonso Pinillos Moncloa, says Peru's leading horticultural companies exported 43.85% more year-on-year during the first three months of 2011. In the second quarter this year, Camposol alone shipped US$29.7 million worth of fruit.

In the first quarter Agroindustrial Beta's exports rose 16.73% year-on-year to US$20.65 million, while El Pedregal's shipment values rose 5.37% to US$19.39 million, according to Comex statistics.

Cillóniz also points to the success of company Frusan with asparagus, along with Iansa subsidiary Icatom with tomato sauce, but its's fresh fruit that Chileans are most investing in.

"The crop that seems to most interest Chilean businesses is table grapes, which are focused in Ica and Piura where they can be produced at the start of November, which is very attractive from a commercial view," he says.

The trend of an increased Chilean professional presence has been recognized by businesses, experts and authorities, including the trade office of trade promotion agency ProChile in Peru.

"There are many Chilean consultants who can provide advice to Peruvian agricultural companies," says Santo Tomás University director of agronomy Álvaro Reyes.

"All of this has meant, for example, that avocado production has increased at an average rate of 40% since the year 2000, reaching export figures of US$83 million and an area of 5,000 hectares," he says.

"While it's still starting, the same could happen with Peruvian table grapes and mandarins."

Cillóniz adds that the Peruvian industry should have a lot of gratitude for the large numbers of Chilean providers of machinery and other inputs, but above all "the Chilean technicians and consultants that have assessed and helped a lot in the technical and commercial handling of our operations".

The Peruvian fruit industry

Pinillos Moncloa says Peru's significance in the global market is growing every day, as the country consolidates its national brand of food.

"Today the United States and Europe have consolidated themselves as the biggest importers of national agri-industrial products. The signing of free trade agreements with Asian countries like China, (South) Korea and Japan boost the diversification of new markets," he says.

Peru's agricultural exports grew 31.4% year-on-year to more than US$1 billion during the first quarter of 2011, according to Ministry of Agriculture (Minag) statistics. The Office of Economic Studies and Statistics (OEEE) says volumes however have only increased 13.3%, which signals a strong rise in prices.

Pinillos Moncloa adds that 32% of Peru's population works in agriculture.

"These companies are large creators of formal employment and have contributed so that zones like Ica and La Libertad can arrive at full employment, contributing to important economic development."

How are Chilean companies perceived in Peru?

While supportive of Chile's contribution to Peruvian agriculture, Cillóniz doesn't pretend that the two countries are without their differences.

"In Peru there are people who are anti-Chilean, as in Chile there are people who are anti-Peruvian. However, they are not the majority," he says.

"The Chilean presence in Peru is very visible in other sectors like aerial transport, for example Lan; in sea transport such as Compañía Sudamericana de Vapores (CSAV); in trade, such as Fallabella, Ripley and Sodimac; in pharmacies where there is Fasa, and other sectors like banking, energy, etcetera."

Reyes says Chilean involvement helps complement the country's strengths.

"These businesses are perceived as serious companies that have delivered important 'know-how' in the production of avocadoes, mandarins and table grapes. It is perceived that the production of these products is complementary for both countries, which may increase the months of production, creating a common front in the defense of commercial interests."

The situation with Humala

The arrival of Peruvian President Ollanta Humala has generated uncertainty in diverse areas of the economy, including the fruit sector. But how do the experts feel about whether he will have a negative impact on this thriving agricultural country?

"It could be, but I expect not. I recognize that many Peruvians, and I'm sure many Chileans too, are concerned for a possible regression in my country's economy. However, I should indicate that I liked very much the visit that Presidente Humala made with President Sebastián Piñera in Santiago, especially the expressions of respect from both countries for commercial exchange," says Cillóniz.

"In things like politics it's like what Saint Thomas Aquinas said, 'seeing is believing'. I expect it will be a few more weeks before we're seeing how the new government treats Chilean investments in Peru. I sincerely expect it will continue booming between Chile and Peru, as it has for the last 10 years or more."

His comments are echoed by Reyes, who also doesn't believe the situation will change.

"Peru has invested a lot in improving its property rights system through through the Special Program of Land Titles, especially in the sector of Piura in the north of Peru. This allows for investments to be made, both for private Peruvians and foreigners, also improving credit access," he says.

"Doing a bit of history, after the agrarian reform in Peru between 1969 and 1979, most of the irrigated land has been controlled by small farmers. The average production in irrigated areas is less than three hectares.  On the other hand there is a strong credit squeeze, reaching figures of 50% of farmers who don't meet their credit needs.

"This means that investments must primarily be made as a re-investment of profits. In this context, foreign investments are always welcome to improve productivity and incorporate new knowledge."

Fruit industry representatives from Peru and abroad will gather in Lima this Wednesday for PMA Fresh Connections Peru 2011. Read about how events unfold at www.freshfruitportal.com.

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