In 2012 Peru will undertake a national agricultural census in order to improve market information, credit access and understanding of how climate change may affect the country’s agricultural productivity. Agriculture (arable farming, stock raising and aquaculture) is to get a greater share of the national budget. To further the government’s plans to improve income distribution and revitalize rural areas, subsidies and economic incentives will have to be specially targeted if they are to do more than concentrate farming assets and profits in the agri-business sector.
According to the last national census, 26% of Peruvians work or survive through activities related to the farming sector. Agriculture accounts for 8% of GDP and 10% of Peru’s exports. National support of this sector, therefore, is a top priority for the government of President Ollanta Humala, which hopes to have reduced poverty to less than 20% by the end of its mandate. Currently, although the data and methodology are disputed, around 30% of Peruvians live in poverty.
The agricultural budget (which still only accounts for 2.6% of the annual total budget) of NS$2.4bn (US$879m) for 2012 went up by 140% from NS$1bn (US$366m) in 2011. It is managed as follows: NS$930m (US$340m) by the central government; NS$804m (US$307m) by regional governments; and NS$114m (US$41m) by local governments. However, according to one agro-economist, Reynaldo Trinidad, only 15% of the total allocated is spent in the countryside, the other 85% gets absorbed along the way in urban centres.
Rural subsidies aren’t just in the form of direct support to agriculture and farmers. The government announced that a rural homes subsidy would be available from 2012 in 880 of the poorest districts in the regions of Apurímac, Huancavelica, Pasco, Huánuco, Puno, Cusco and Ayacucho. The previous Alan García government (2006-2011) already had in place a similar outfit called Techo Propio – the point that the government’s housing minister, René Cornejo, hastened to make is that the current government’s subsidies will be distributed alongside the renegotiation of interest rates offered by local banks. Cornejo added that this would not mean direct state interference in setting local interest rates, but rather that it would be a private sector-led initiative. Currently, rural rates of interest are over 12% a year- whereas the government believes that they should be below 10%. Annual inflation is just under 4%.
Innovation and investing in sustainability
The Inter-American Development Bank (IDB) is supporting Peru’s sustainability credentials by advancing ‘Green Credit’ to sustainable agricultural projects and those that promote water re-usage, amongst others. Over US$50m has been allocated for disbursal to projects meeting the IDB’s sustainability criteria. On 6 October the committee of Ica’s industrial water users, which includes several big agri-business groups, announced that it was developing a system for all water to be treated and re-used, solving the chronic shortage of water that Ica, a city on the dry coast, faces. Ica is essentially an oasis in the midst of Peru’s largest desert. Such projects could be part-funded by the IDB.
According to the bank, Peru is a high-risk country in terms of climate. Between 1970 and 2009, Peru has suffered 105 natural disasters that affected 18m people, ranging from droughts, floods, mudslides, earthquakes and volcanic eruptions.
- Alternatives to illicit coca cultivation
An investment of US$250m over a period of five years is what the ministry of agriculture calculates would be necessary to turn over 60,000 hectares (ha) from coca plantations to an alternative cash crop. Miguel Caillaux Zazzalli, the minister for agriculture, said that in spite of having 340,000ha of coffee plantations, 75,000ha of cocoa, 60,000ha of bamboo, 50,000ha of palm, 15,000ha of citrus and 8,000ha of pineapple, these crops end up being sold cheaply because producers cannot get them to international markets.
