José Manuel Hernández, Peru’s Minister for Agriculture and Irrigation, discusses how the country will drive agricultural exports by supporting small-scale farmers, promoting its products in countries with whom it has free trade deals, and attracting US investment in agro-industry, forestry and dams.
What assessment do you make of the country’s economic growth, and what has been the role of agriculture in this matter?
In the last 20 years we’ve had a sustained growth. In the regional scope, indeed, we’ve been leading economic growth. However, the agricultural sector, in that same period, has had some ups and downs. There have been moments when we’ve grown faster than the economy and there have been moments when we’ve been under that general performance. In the five years of the previous administration, agriculture grew by an average of 3% a year. What we want right now is to give it a greater momentum. What we want is to have no less than 4% growth per year, so that we can predict in 2021 an annual growth rate of 5% in the agricultural sector. With that, we’ll contribute more to the growth of the economy in general.
We have three key sectors to quickly reactivate the national economy. The agricultural sector, including the agro-industry in general, and the tourism and gastronomy sectors. There are three sectors that we can push quickly and, through the agricultural sector as a whole, be able to contribute to decreasing the negative impact from the fall of mineral exports.
At the moment, the agricultural sector is in second place in value of exports, right after mining. We want to drive agro-export in a way that we double exports by 2021. Today we’re a little beyond $5.2 billion. We want to start 2021 with $10 billion in agricultural exports.
What are the main challenges for this sector, and what measures will be taken to give that new impetus to Peruvian agriculture?
We have very pronounced types of agriculture in the country. On one hand we have very small-scale agriculture with its culture of smallholdings, self-consumption, and family agriculture, which is the base of the rural economy in the country. On the other hand, we have high-tech agriculture that competes with the highest production standards in the world, which is export agriculture and brings asparagus to Spain, France and England. Also cranberries, mangoes, avocados and artichokes to the United States. A quite diversified export, and one with many of its products in gourmet or superfood versions, is quinoa. These are some of the agro-exports that we want to reach $10 billion per year. On the other hand, one of the main challenges that we face is about being able to assist and include small-scale farmers in the system – those farmers who have less than five hectares.
We will support small-scale farmers with technical assistance systems and training in order to close the big technological gap – in terms of performance – that they have in relation to large-scale farmers. Once they have high-quality seeds and they have technical assistance, we’ll focus on resources. For that, we will strengthen Agrobanco. Agrobanco will be leveraged with the assignation of 500 million soles ($147 million) in order to increase its working capital.
As for agro-exports, it has its own dynamic, and basically what it needs is logistics: it needs nice roads, ports, airports, and distribution centers. But in agriculture, there is another key sector, because in every free trade deal, the first barrier is the sanitary barrier, a non-tariff barrier. How do they participate there? Through the National Agricultural Safety Service. The equivalent of APHIS in the United States, here it is called SENASA. SENASA establishes and negotiates everything so that Peruvian products can enter markets that we have trade deals with. It’s a very specialized activity which we’ll put a lot of effort into.
Since the free trade agreement (FTA) with the United States came into force in 2009, non-traditional Peruvian exports to the US have grown more than 90%, and agro-exports have grown 144%. How important is a market like the United States for Peruvian agriculture, and what are the strategies that this administration will implement to promote Peru’s agricultural products in the United States?
The FTA with the United States – which was the first one inside the market opening scheme and where I had the opportunity to participate in several debates – was an agreement that opened up the world to us, not just the United States. We have to recognize the opportunity this gave us. We have always been increasing our exports to the United States. Regarding agriculture, a little over a third of the exported value goes towards the American market, with different products. We want to boost and increase that.
We want to take advantage of this trend given the big consumer market there is in the United States. Also, the US consumer is one with great purchasing power. And we can position not only our fruits and vegetables there, but also our exotic and native products, which are organic, high quality and beneficial to health.
The great advantage we have in the United States is the counter-season. This has always been our great window of opportunity. The fact that the United States is in an opposite season to ours, makes it possible that when they produce, we can sell to other parts of the world, but when they don’t, we can immediately supply to them because in Peru we can produce everything during the whole year: that is the great advantage we have. And with that, the American market, is obviously our main partner for agricultural products, because the Pacific corridor allows us to get there easily; it is a market we already know and that knows us and categorizes us as suppliers of high-quality.
The US is not only a great trading parting for Peru, but also one of the main issuers of foreign direct investment. In what way can the American investor get more involved in Peruvian agriculture? What investment opportunities in the sector will you point out?
Certainly, Peru needs to regain the capacity that the United States has to invest here. In the last few years, the rate of investment has been held. With the US Ambassador Nichols, we talked not only about agro-industrial projects but also forestry projects, about how to develop the forestry activity. One of the activities in which we can have a quick response, not only from the American government but also from American investors, is if they wanted to invest in agro-industrial and forestry projects, or in the exploitation of the different plants that we have, such as exotic and medicinal plants in the rainforest areas.
Another window of opportunity is the fact that in Peru we have the need for large dams. For example, I want to promote the Pampas Verdes Project in the south of the country in order to irrigate almost 200,000 hectares, which represents an investment of $5 billion. We can create a public and private association with an American investor. We sell the lands; we will recover the investment and in 20 to 30 years we will pay the balance to the investor.
What is your vision as Minister of Agriculture?
Agro Próspero, which is the name of our management plan, is my personal vision. It’s my duty to help small-scale farmers so they have a higher performance through constant support throughout the production chain, in order to translate that into a higher income for their homes. Impacting the rural economy in a positive way, that’s what it’s all about.
Likewise, it doesn’t make sense that Peru is a very diverse country and that the poorest people in the country are in the Amazonia. What we propose in this Ministry is to give value to our biodiversity, generating a greater wellbeing among the local population. For that, we will create the first National Germplasm Bank in the world. We want to become into the suppliers of germplasm for the rest of the world; that involves the use of native, exogenous and Amazonian plants which are good for people’s health and beauty, among other things. In that regard, we will register natural products, describe its properties and in what way they relate to the ancestral habits and customs of indigenous peoples. The key is valuing our natural virtues in order to share them with the world. It’s a great challenge, but it represents a dream that I want to see become a reality, and for that we will work hard in my administration.