A single exporter that prides itself on fair trade and ethical standards dominates the Peruvian citrus industry.
Consorcio de Productores de Fruta (CPF) exports around 50 per cent of Peruvian-grown citrus after only four years of trading. The secret to its success has been to target Europe rather than North America, the latter being a destination that many South American exporters aim for in the first instance.
With a small local market and a static domestic population, it is imperative for survival that the Peruvian citrus industry seeks export markets.
Gaining a solid market presence in Europe has been the first aim of CPF, which represents the leading-edge citrus growers in Peru.
“We started exporting citrus to the European markets four years ago, and have successfully developed markets in the UK, Spain, France, and The Netherlands to name a few,” says Ricardo Polis, general manager of CPF.
Attending international fruit emporiums has been key to the promotion of CPF, enabling potential customers to get a thorough understanding of the varietal quality of citrus from Peru, and an appreciation of the ease of which business can be conducted between Peru and the rest of the world.
Using distinct product branding, CPF has developed the “Malki” logo - a South American Indian word roughly translated as leisure and entertainment - which has commanded good brand awareness and customer loyalty in its export markets. This brand identity has lead to CPF valuing its exports at around £6.8 million a year.
Mandarins have continued to drive the export market in the citrus sector over the last few years, with exports increasing by around 30 per cent during the last quarter of 2004. A long season and a natural affinity with Spain has seen business thrive in this area.
Prompex, the Commission for Export Promotion (Peru), recently reported on concerns that although exports to Europe were growing, Peruvian exporters were concentrating on few products and few end-markets, which could result in market loss due to increased competition from other southern hemisphere producers.
However export companies like CPF disagree. With farmers meeting EurepGAP certification, CPF sees itself in the European marketplace for the long term.
Polis says, “CPF provides teams of experts out in the field and in packhouses to assist growers and packers meet and maintain quality parameters. We are in the market for many years to come.”
CPF has also secured markets in South East Asia, mainly Hong Kong, which is the region’s largest distribution hub.
Peruvian exporters continue to head to Europe as they believe competition from other citrus producing South American countries, in particular Brazil, for the US market is much tougher to compete with there than in Europe.
Peru currently produces around 729,000 tonnes of citrus each year, of which 26,000t is exported.
The organic sector in Peru is yet to reach commercial scale, however a few farmers are beginning to see market opportunities for organically certified products. However the problem remains in gaining internationally recognised certification.
Investment in the Peruvian citrus industry has been a key factor in developing new varieties for export markets. Easy peel and seedless varieties, with longer seasons, and storability have been key areas for the citrus research and development (R&D) program.
Increasing productivity has also been a key component of R&D, however to-date, yield has increased across the sector on average only 12 per cent per annum over the last 10 years, and that has mostly been down to better growing seasons than varietal and production management improvements. In the lemon and lime varieties, yield has remained stagnant.
Interestingly, the Peruvian government, the citrus industry and other agricultural sectors have managed to attract international cutting-edge research into remote agricultural regions.
The New Zealand technology centre, UNITEC, has established a program in remote Peruvian regions that enables farmers to connect to satellite technology to access agricultural and market information.
Project director, Andy Williamson says: “The aim of this program is to provide the tools and training to connect villages to existing planting and harvesting advice, as well as business initiatives.”
Williamson continues by saying: “This is the practical application of research.”
Trade with Peru is conducted in US dollars, although the Sol (Peruvian currency) is stable and fully convertible against the US dollar. Trade barriers have been cut, and direct subsidies to exporters and domestic producers have been eliminated. Foreign investment is encouraged through anti-corruption measures.
Regional integration has been the key to Peru’s improving position within the global economy. Established Free Trade Agreements with Bolivia and Chile, and membership to APEC, has improved the country’s access to foreign markets.
After four years of negative growth, private investment across all sectors was reinvigorated in late 2002 as a consequence of improved expectation about future economic growth and government stability.
With direct foreign investment in Peru estimated at £1.6 billion in recent years, industry has suggested that agricultural investment is around £16 million and increasing. With interest in horticultural development, in particular the tree fruit sectors, foreign investors are seeing the attraction of Peru over other South American countries because of the availability of the low-cost labour force, and access to greenfield sites.
However, investors are importing skilled labour and managerial expertise to get the investments up and running, before handing over to a locally trained labour force.
Much of the agricultural investment to-date is from the United States.
Based on a production area of 53,000 hectares, the £357m citrus industry is on the right track to success. Exports are now worth £13.8m a year with steady increases predicted. Recurrent economic growth and a climate conducive to foreign investment will continue to see the citrus industry in Peru grow and develop into a globally significant production base.
This is good news for European retailers, which are keen to expand varietal sources and consistent supply. With an ever-growing global supply base, retailers are able to command cheaper prices for better quality, without fear of regional seasonality issues.
