PERU: Will Agro-Export Programme Benefit All Farmers?

By Milagros Salazar Reprint | | Print |

Milagros Salazar

LIMA, Nov 10 2006 (IPS) - The poor campesino exporting his products to the world is one of the images most highly touted by Peruvian President Alan García. But his Sierra Exportadora programme, which begins to operate this month, runs the risk of concentrating its efforts only on those already able to compete in the market on their own.

Before taking office on Jul. 28, García promised to uproot the dire poverty in Peru’s Andean highlands region, known as the Sierra, by promoting the cultivation of export crops on 150,000 hectares of land over the next five years.

So far, 90 projects are planned for 12 regions, involving 26 niche products like artichokes, quinoa and amaranth (traditional Andean grains), and paprika, as well as trout. The initiative will also provide support for activities like craft-making, jewellery-making and afforestation.

The programme will begin on Nov. 24. Financing for the first year will amount to 50 or 60 million dollars, although the origin of the funds has not yet been determined, as indicated by the responses received by IPS from different government sources.

Peru’s impoverished rural areas are home to 5.7 million people, or 21 percent of the total population of 28 million. And 64 percent of all rural residents live in the Sierra region, where 10 of Peru’s 12 poorest provinces are located. In the central regions of Huancavelica, Ayacucho and Apurímac, 44 percent of the population lives in extreme poverty.

But some critics say the Sierra Exportadora programme is a short-sighted initiative that will bring only short-term gains, because it has not been preceded by structural reforms in agriculture, like land titling efforts that would enable small farmers to gain access to bank loans, improved use of water during times of drought, the construction of roads to connect farms with markets, or training for campesinos to help them improve their crops.

“If the underlying problems are not dealt with, the programme will basically enable agribusiness interests to lease the land of hundreds of campesinos, who will become their employees,” economist Miguel Macedo, with the non-governmental Peruvian Centre for Social Studies (CEPES), told IPS.

A large portion of the land belonging to campesinos (small farmers) is not capable of producing export products, he added.

According to the 1994 agricultural census, more than 60 percent of the country’s 1.8 million family farms were smaller than five hectares. Most of the families did not have formal land titles, and the properties were too small and the land too poor to achieve high productivity levels.

The president of the National Agrarian Confederation, Antolín Huáscar, said that of the country’s eight million farmers and rural workers, only one million own their land and have access to financing. These farmers are mainly concentrated in Peru’s long narrow coastal region.

According to the Agriculture Ministry’s “special land titling project”, 77 percent of farmers in the region along the Pacific Ocean hold land titles, compared to 53 percent in the Sierra and just 39 percent in the country’s Amazon jungle region.

“Sierra Exportadora is ready for the best-trained farmers, for a group of winners. But what new aspects does it offer us, if it will basically support the same farmers who are already exporting?” asked Macedo.

Export agribusiness in Peru has grown steadily over the past few years, and in 2004, brought in 900 million dollars in revenues, according to the Agriculture Ministry.

Gastón Benza, executive president of Sierra Exportadora, told IPS that “the most logical way to proceed is to start with the most viable projects, and gradually expand to incorporate farmers in the most remote valleys.”

The first aim of the programme will be to increase the value of farmland by boosting productivity levels and efficiency. Later, a collateral fund will be created to enable campesinos to receive loans, explained Benza.

“The main task is to create wealth in areas where there is absolutely nothing today,” he added. “Only then can farmers start thinking about title deeds for their land, whether they’re going to keep it or sell it.”

But the chairwoman of the congressional Agrarian Commission, Nidia Vílchez of the governing Peruvian Aprista Party, acknowledged to IPS that progress must be made in land titling efforts in order for the Sierra Exportadora programme to be successful, and said such efforts are being coordinated with the Agriculture Ministry.

Researcher Carolina Trivelli at the Institute of Peruvian Studies said the programme has at least put the long-ignored highlands region on the political agenda.

She added, however, that the government must take into account two key factors: the diversification of economic activities that exists in the Sierra region because it is impossible to survive on a single source of income; and the need to bring together rural and urban markets in order to guarantee a chain of production to meet domestic demand.

Congress had successfully pushed to ensure that the Sierra Exportadora programme was not merely restricted to agriculture.

Nevertheless, it is not clear how the initiative will tackle its biggest challenge: the question of rural development.

In Benza’s view, “once the efficiency and productivity of land is improved, links between the internal and external markets will immediately be achieved.”

However, that argument is questioned by experts who say the laws of the market have not proven to be able to resolve problems of unequal access to opportunities.

A study by CEPES and the National Convention of Peruvian Agriculture (CONVEAGRO) states that the benefits for the majority of farmers in the highland areas will be limited in a context of market liberalisation such as what will take place under the free trade agreement signed with the United States, which is still pending U.S. congressional ratification.

That is because there will be no balanced playing field due to the difficulties faced by the Peruvian agriculture sector and the huge subsidies that the U.S. government shells out to farmers in that country, says the study.

The U.N. Food and Agriculture Organisation’s (FAO) 2005 report, “Agricultural trade and poverty: Can trade work for the poor?”, said something similar.

“In countries with a large proportion of low-income and resource-poor people living in rural areas and dependent on agriculture, reforms aimed at raising productivity, creating non-agricultural employment and facilitating the transition out of agriculture were essential for enhancing food security in the medium-to-long term.”

“However, because such policies may take some time to yield results, they should be set in motion before enacting trade or agricultural policy reforms that may impinge on low-income, food-insecure households,” said FAO.

Another aspect questioned by the document by CEPES and CONVEAGRO is the scaling down of the initial goals set by the Sierra Exportadora programme. At first, García had talked about 150,000 hectares dedicated to export food crops and newly-oiled production chains that would generate 300,000 direct and indirect jobs.

But now, Benza has explained that only 70,000 hectares will go towards the cultivation of export crops, and that the rest will be forested areas.

The CEPES/CONVEAGRO study criticises the failure to clearly identify the markets to which the products are to be sold.

But Benza told IPS that the government is studying markets, mainly in the United States and Europe, as well as sources of financing.

He also said 10 percent of the funding will come from international development aid, and the rest from a special allotment obtained through the restructuring of the budget and austerity in spending.

But the programme’s project manager, Julissa Sotil, told IPS that most of the funds will come from the Inter-American Development Bank (IDB) and the Andean Development Corporation (CAF).

What will be provided to farmers will not be subsidies, but facilities to carry out projects and obtain financing, as well as advice on technical and marketing aspects, said Sotil. The aid will last three to four months. The programme will also coordinate the creation of irrigation and transport infrastructure with other public institutions.

Of the 90 projects being planned, the majority were ready to be implemented even before García took office.

Four of them involve the production of artichokes, milk and cheese, trout and local handmade jewellery in the central region of Junín.

Rural leader Huáscar told IPS that farmers are afraid that the programme will ignore production of traditional crops like wheat and barley, which many campesinos depend on for a living, and that it will put no curbs on the influence of the economic elites who have been called on to participate in the projects.

“We small farmers cannot become the farmhands of these businessmen; that would not bring about sustainable agriculture,” he said.

Huáscar has sought to meet with authorities so that the agricultural associations of 15 regions, which he represents, are informed of the programme in detail and are incorporated on the Sierra Exportadora board of directors, as stipulated by the law that gave rise to the programme.