Opinion

Political Crisis in Peru Hampers Key Agricultural Exports

Fresh Asparagus
Vegetables
Published Jan 25, 2023
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Peru’s political instability has seriously threatened the agriculture industry, particularly exports of key products. In an attempt to dissolve the nation’s Congress in order to prevent his own impeachment, Peru’s president Pedro Castillo was ousted. The impeachment has caused chaos in the different regions of the country, in which congress had already declared a state of emergency. As a result, asparagus, grapes, berries, potatoes, and onions have all been vulnerable to the logistic delays that the crisis has caused. Delays have already caused severe disruptions in Peruvian supplies.

Peru’s president Pedro Castillo was ousted in December after an attempt to dissolve the nation’s Congress in order to prevent his own impeachment. The political unrest has caused chaos in the different regions of the country, which the congress had already declared a state of emergency. Two of the most important regions in terms of agro-exports, La Libertad and Ica, were greatly affected. Blockades paralyzed several sections of the Panamerican Highway, one of the main roads crossing the country from north to south. This prevented the flow of food to the capital and to the port of Callao, the main port for agro-exports.

In Peru’s Andean region, the main supplier of foodstuffs for the domestic market, the blockades prevented the transport of raw materials and foodstuffs. While in Ica, a flagship agro-export region was affected in numerous crops, including asparagus and grapes for export. Potatoes and onions, products for the domestic market, also suffered the consequences of the immobilization. Shortages and price rises in the Lima markets were the immediate results, and many of the harvests were ruined.

Additionally, there was a nationwide transport strike prior to the self-coup. According to the Peruvian Association of Agricultural Producers' Guilds (AGAP), the stoppages and other disturbances generated during the protests meant a loss of USD 100 million in agro-exports and an accumulated USD 200 million so far this year. The shutdown of the logistics in the middle of the working season caused a loss for more than 150,000 agricultural workers.

Asparagus has been the most affected crop by the political situation as supplies in the peak season have been short. The political situation in Peru has caused a severe shortage of asparagus supplies in the US that has pushed prices up. According to the USDA, asparagus prices in the US market have registered a 35% YoY increase driven by delayed shipments from Peru due to the blockades and unfavorable weather in Mexico that have delayed the harvest from Baja and San Luis Potosi. Since July, it was reported that half of the Peruvian asparagus crop was threatened by a fertilizer shortage, which ended in rising production costs for asparagus producers.

On the other hand, despite the political turmoil, Peruvian grape season has been reported to be going strong. According to the USDA's annual report on Peruvian deciduous fruit, ideal climatic conditions, an abundant water supply, and rising demand for table grapes are driving the increase in grape production in Peru. The Association of Producers and Exporters of Table Grapes of Peru (Provid), in its second crop estimate for 2022/2023, projects a 13% surge in volumes compared to the previous campaign. This rise in the projected amount of 8.2 kg boxes indicates that Peru will export 73 million boxes, up from 64.4 million boxes during the 2021/2022 campaign.

Although Peruvian agro exports increased by 17.6% YoY in October 2022, with blueberries as the most valuable crop valued at USD 1.1 billion, uncertainties on agro exports still persist.

Along with the political turmoil, drought in the Peruvian Andes is threatening a decline in production for the 2023 season, with avocados and asparagus as the most affected crops. Additionally, the fertilizer shortage in the country has not been resolved as the urea fertilizer quota has not been achieved, and this will have a negative impact on future production. As a result, 2023 is expected to be one of the most difficult years for Peruvian agriculture.

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