In the last 20 years Peru has been increasing its exports of some agricultural goods as avocado, blueberries, grapes, mangoes, that has allowed the country to be among the biggest seller of those goods in the world and in some markets, like for example in China, it has become the top supplier of blueberry. Peru exported to the world 6.3 billion dollars in these goods in 2019, a huge increase from the 645 million dollars sold abroad in 2000. The reason for that boom has been the inflow of foreign investment and technology in this field. Also, investment in infrastructure sector like subways, ports, highways, has been increasing due to the money coming from abroad. So, besides investment in natural resources like minerals, natural gas, oil, resources in which Peru is well endowed, there exists plenty of opportunities for foreign investment in sectors like agriculture and infrastructure.

1. Investment opportunities in Peru
1. State of Issue
In the last 20 years Peru has been increasing its exports of some agricultural goods as
avocado, blueberries, grapes, mangoes, that has allowed the country to be among the
biggest seller of those goods in the world and in some markets, like for example in China,
it has become the top supplier of blueberry. Peru exported to the world 6.3 billion dollars
in these goods in 2019, a huge increase from the 645 million dollars sold abroad in 2000.
The reason for that boom has been the inflow of foreign investment and technology in
this field. Also, investment in infrastructure sector like subways, ports, highways, has
been increasing due to the money coming from abroad. So, besides investment in natural
resources like minerals, natural gas, oil, resources in which Peru is well endowed, there
exists plenty of opportunities for foreign investment in sectors like agriculture and
infrastructure.
In this article first it will be seen what are the causes for the boom in agriculture exports,
second the need for investment in the infrastructure sector, and third it will be seen the
possibilities that foreign investment has of participating in those areas.
2. Causes and Analysis
Peru traditionally have been an exporter of some agricultural goods like cotton, sugar
cane, and coffee (these are called traditional agricultural goods), but in the last 20 years
exports of so called non-traditional agricultural goods have been increasing.
Goods that Peru exports from the year 2000 onwards are called non-traditional agriculture
goods and these are mostly fruits and vegetables, but also includes other products like for
example shrimp and prawn feed (used in aquiculture), and evaporated milk.

2. As can be seen in the following graphic specially from the year 2010 sales abroad of two
of the biggest exported goods, grapes and avocados, experienced a steady growth.
Graphic 1: Peru exports of some agricultural goods 2000 to 2019, million dollars
(uva=grapes, palta=avocado, azucar=sugar cane)
Source: Ministry of Foreign Trade and Tourism: “Trade Monthly Report, December 2019”
But the other star of the major trio of exported goods, blueberries, have experienced in
the last two and three years a more spectacular growth. Just last year for example exports
of this good experienced a growth of 51% compared to the year before. See Table 1.
Table 1: Peru non-traditional agricultural exports (fruits and vegetables), 2019
Product Amount in million
dollars
Place in the
world
Annual growth %
2019/2018
Grapes 875 Fifth 8.0%
Blueberries 825 First 51.0%
Avocado 825 Third 4.0%
Asparagus 539 First 2.5%
Mangoes 359 0.6%
Cocoa and derivatives 294 9.9%
Citrus 214 2.4%
Others (shrimp and pawn feed,
banana,quinoa, paprika, onions,
etc.)
2,361 0.5%
Total 6,292 7.4%
Source: Ministry of Foreign Trade and Tourism: “Trade Monthly Report, December 2019” and “Peru Exports 2019”
What are the reasons for the extraordinary growth in the export of these non-traditional
agriculture goods like fruits and vegetables? Here some of these are given:

3. 1. Peru is a country with a variety of climates, and in the coastal region moderate
temperatures allow the harvesting of several crops all year around. Asparagus for
example can be cultivated and harvested all year around, depending in the
location.
2. Peru began opening its economy in 1990, making easier for Foreign Direct
Investment to come to the country. Also tariff rates were slashed for capital goods
and intermediate goods since that year, and this has contributed to the
modernization of the agricultural sector and elevated the productivity of the
sector. In asparagus, grapes, blueberries, and cocoa for example Peru productivity
is among the highest in the world.
3. From the end of 1990s the government set up special treatment for investment in
this kind of agriculture and in the agroindustry, with for example a corporate tax
of 15%, a rate that is half what is paid in other sectors of the economy, and thanks
to this investment in this sector experimented a boom. Other measures that made
attractive to invest is that workers employed in this sector cost less to an employer
because they receive for example half of paid holidays that workers in other
places, the employer pay less to the national pension system per worker that in
others sectors and other measures. Even if last year 2019 the law was amended to
give more benefits to the worker still is attractive to invest in this sector and these
benefits have been extended until the year 2031, giving certainty to the investment
in this sector.
4. Peru have plenty of cheap labor force that is willing to work in a labor intensive
sector as it is the agriculture of fruits, vegetables, and the agroindustry, of canned
foods. Peru minimum wage is of 930 soles (around 280 dollars) and even if

4. workers in these sectors earn in average 15%-20% more than the minimum wage,
the labor cost is competitive for the companies to pay.
5. Another reason for the increase in production and export in non-traditional
agricultural goods is that thanks to irrigation works more land have become
available for agriculture. It is estimated that from 1995 to 2018 around 150
thousand hectares of arable land have come to the market by bringing water from
rivers in the Amazon regions and Andes mountains to the desert in the coastline.
And up to 2025 probably an additional 150 thousand hectares will be brought to
cultivation. Most of the available new land is destined for the non-traditional
agriculture sector. And in this aspect foreign investment have played an important
role. For example the Project Olmos, in the region of Lambayeque north of Peru
in its phase I (completed in 2012 and in operation from 2014) brought 43,500 new
hectares of land, and it is estimated that in its phase II could bring in addition
100,000 hectares of land. It is estimated that the Phase I of the project had a cost
of around 580 million dollars of which the Brazilian company Odebrecht invested
a part of it (the other part was put by the Peruvian government)
6. Besides those reasons, from the year 2000 Peru began an aggressive push for
establishing Free Trade Agreements (FTA) with the biggest markets in the world,
especially with Asian countries. Thanks to this, goods from the agriculture sector
like fruits and vegetables, where Peru is very competitive, can enter tariff free to
many markets. Peru has FTA with the biggest markets in the world, like US,
European Union, China, and also with Japan, and Korea.
Regarding the infrastructure sector, Peru is a country with a dire lack of physical
infrastructure and therefore the need for foreign investment is evident here. According to

5. a study published in 2019 by the Ministry of Economy and Finance of Peru about the
National Infrastructure Plan, the country will need around 106 billion dollars in
investment in the long term in this sector, of which investment in the area of transport for
example will mean 44% of the total, and in water and sewage area another 26%.
The Global Competitiveness Report 2019 published by the World Economic Forum,
states that even if Peru is in the 65 place in the overall Global Competitiveness Index (of
a total of 141 countries), in the pillar of infrastructure Peru is in place 88. But in item of
transport infrastructure is in place 97, in road connectivity is in 102 place and in quality
of road infrastructure is in place 110. So, the need for an improvement or even
construction of new infrastructure is really urgent.
As the State have not enough money to invest in those large scale projects, since some
years ago the system of Public Private Partnership (PPP) is operating in Peru. From the
point of financing two types of PPP exist, the first one is self-financed PPP, when the
investment projects can be repaid using the resources they generate, that is, they do not
require co-founding from the government. The second one is co-financed PPP, that
require co-funding (transfer of public resources) and/or the implementation of collaterals
in favor of the investor, to make the project sustainable.
Already this sector is receiving huge foreign investment. Just to mention some of them.
The project of the Lima Metro 2 (that will include the first underground train being built
in Peru) and in construction now, will cost a total of 5.6 billion dollars and it is estimated
will be completed by the year 2022. Two of the companies participating in the engineering
supervision consortium of this project are the Korean companies Dohwa Engineering Co.
and Busan Transportation Corporation.
The construction of the second runway of Jorge Chavez International Airport, in Lima,
capital of Peru, and that was supposed to begin this year, it is estimated will cost 1.5

6. billion dollars. An on May last year it was announced that the Chinese company Cosco
Shipping Ports will build a huge seaport north of Lima, at a cost of 3 billion dollars.
3. Future Expectations and Implications
As world demand for agricultural goods like fruits is increasing Peru exports are also
bound to increase. But for this, more investment in his sector is needed. Most of the
investment have been coming from countries like Europe and Latin America. As this
sector is labor intensive and the country have a pool of cheap labor force, this will
generate employment to many Peruvians.
In this sector demand from Asia will increase the most as living standard in that region
increase. But also lets also not forget that as people become older the need for healthy
foods or organic foods will increase and in this regard for example Peru is well positioned,
as it produces goods like avocados, quinoa, blueberries, organic banana, etc. But so far
investment in this sector from Asia is nearly no existent, so there is a huge opportunity to
companies from that region in this sector.
In the infrastructure sector as Peru economy continues to growth the need for more and
better infrastructure also will increase. The money coming to this sector has been mainly
from Europe and in Latin America specially from Brazil. But Chinese companies are
joining this group and as mentioned even a Korean company has participated in the
engineering supervision of the project of one subway line. A modern infrastructure will
help rise the competitive of the country economy and help improve the live conditions of
Peruvians. In this sector countries like China, Japan, and Korea have opportunities as
they have been very good at building infrastructure that have allowed them to grow very
fast, something that Peru is trying to achieve now.

7. Lastly it should be said that Peru has been one the fastest growing economies in Latin
America from the beginning of this century and is also one of the most stable in the social
and economic aspect.