Peru's climate and different geographical zones make it an important
agricultural nation. Of the 120 domesticated plants Peru has provided the world,
the potato is the most important. There are more than 3,000 varieties of
potatoes found in Peru, making it the world's genetic center for the crop. Other
important crops include sugarcane, coffee, and cotton, with Peru producing 2 of
the world's finest strains of cotton: Pima and Tanguis. In addition to these
staples, the UNDP estimates that the Andean and jungle food baskets include
important vegetables and fruits that are relatively unknown but high in vitamins
and proteins. These include camu-camu, a small jungle fruit with the highest
known levels of vitamin C, and quinoa, a highland grain. In addition, Peru is
also a major supplier of crops such as asparagus, because of its unique climate.
Peru has a window for asparagus (US$120 million in export earnings in 1999)
exports between November and January, months in which almost no other country
exports the product. Other "designer" products include mangos, sweet onions, and
Other important elements in the agricultural sector are domesticated Andean
animals including llamas, alpacas, guanacos, and vicuñas. All 4 belong to the
same family and provide varying levels of fine wool. The vicuña, which is not
domesticated, has the world's finest wool. Vicuñas have been on the endangered
species list for decades, but are rebounding, numbering close to 150,000 today.
Vicuñas are protected under the CITES convention, which means their wool cannot
be commercialized. The Peruvian government is lobbying to have the prohibition
A potentially important source of income could come from Peru's virgin forest
in the form of logging. The Peruvian government began overhauling its laws
governing the timber industry in 2000, dividing up parcels and placing
conditions on logging and exports of slow-growth hardwood trees such as cedar
and mahogany. Together with Guyana, in northern South America, Peru is one of
the few countries on the planet that has most of its forest reserves relatively
Despite its history of agriculture and immense natural wealth, agriculture
has received little attention in the past few decades. The sector continues to
struggle after years of government intervention in the 1960s and 1970s (when the
military government undertook agrarian reform), and benign neglect throughout
most of the 1980s and 1990s. For a brief period in the 1980s, during Alán
García's presidency (1985-90), the government attempted to offer interest-free
loans to farmers through a state-run farmers' bank. The bank was a failure, with
negligible returns on loans and declining production.
Agriculture represents 13 percent of GDP but employs 30 percent of the
country's population. The incoming government proposes upping the sector's
percentage of GDP as well as its employment participation by focusing on
value-added products and concentrating on vertical integration .
Cotton production is one agricultural product that the government is attempting
to increase through vertical integration. Cotton production is linked to the
country's textile manufacturing. The country's textile industry exported more
than US$700 million in 2000 and includes several vertically-integrated
companies, such as Textiles San Cristobal, which produces for U.S. manufacturer
Ralph Lauren and other high-end clothing companies. They run cotton plantations,
thread and fabric factories, garment producers, and exporters of the final
The goal of Toledo's government is to get Peruvian textiles included in the
list of products exported to the United States tariff-free under the Andean
Trade Preference Act, passed in 1990. The Peruvian government is pushing for
them to be included in an extension of the act, which is currently being
negotiated. The Peruvian government believes that if textiles receive
tariff-free status, there will be a boom throughout the textile industry,
beginning in the cotton fields.
The government plans on doubling the number of acres dedicated to cotton in
order to increase cloth production to feed the textile industry. Other targeted
products include hard yellow corn for the poultry industry, coffee for the
specialty coffee market in the United States and Europe, and sugarcane. Peru
currently imports corn and sugarcane, despite its long history of development of
both crops. According to the Department of Agriculture, Peru has been a net
agricultural importer since 1980, with agriculture imports worth roughly US$200
million more than exports in 1999.
Hundreds of laws were passed under the previous administration to stimulate
the agriculture sector. These included privatization of fallow lands and
irrigation systems, as well as removing conditions on land ownership and tenure.
However, the government failed to pass 2 important pieces of legislation
governing community-owned lands and water rights. Without these 2 laws, large
agroindustry projects will not be able to operate.
One of Peru's best-known crops is coca, which is the raw material used to
make cocaine. In addition to coca, Peru also produces substantial quantities of
marijuana and, in recent years, poppies used in opium production. The
government, together with its U.S., European, and UN partners, has been reducing
coca crops since the mid-1990s, with promising results. Coca crops have fallen
from 276,000 acres in 1992 to 84,000 acres currently. Neighboring Colombia has
passed Peru as the leading producer of coca.