LatinFinance - May/June 2017 - 35

director of ADEX's agro-export unit.
While authorities are confident that the
irrigation ventures will meet estimates,
problems have arisen. The Olmos project
was built by Brazil's Odebrecht, which is
currently under intense legal and financial
strain after admitting to corruption at home
and in many Latin American countries,
including Peru. A December 2016 plea bargain in the US indicated the company paid
$29 million in bribes to secure contracts in
Peru between 2005 and 2014.
Odebrecht attempted to sell the Olmos
project earlier this year to a joint venture formed by Canada's Brookfield and
France's Suez, but the Lambayeque regional government rejected the sale, arguing
that it could not go through while corruption investigations are ongoing.
Snyder says Odebrecht's problems are
not disrupting Olmos because all the lands
have been sold and Odebrecht's local subsidiary, H2Olmos, has committed to maintaining the irrigation system. "We don't
expect any problems," he says.
A different scenario faces Chavimochic,
where Odebrecht and Peru's Graña y
Montero, a local construction company,
won the concession in 2013. The $715
million third stage has been delayed, with
the companies unable to reach financial
close. President Kuczynski said at a press
conference in March that the Chavimochic
impasse would be resolved within a few
months and that work should be completed within the 2018 deadline, indicating that
several Asian and European companies,
which he did not name, had expressed

Growth story
Peru's agricultural exports, $ billion

7
6
5
4
3
2
1
0

2012
Source: ADEX

2013

2014

2015

THOMAS SNYDER, AGRO VISION

"IN THE MIDDLE OF
WINTER IN THE US, IT
IS THE HEIGHT OF
PRODUCTION HERE.
AND WE HAVE
LOW-COST
PRODUCTION. THOSE
ARE TWO ADVANTAGES
THAT MAKE PERU
COMPETITIVE"

interest in taking over the work.
After more than a decade in the planning stages, construction on Majes Siguas II
began in late 2016. The Arequipa regional
government, which is overseeing the project, faces some opposition from local farmers. They say the plan to sell plots starting at
200 hectares makes it impossible for them
to acquire land.
Juan Carlos Barberena, who heads
an environmental
group in Huancarqui, a small town
near Majes Siguas
II, says the project,
like Olmos, will
not benefit local
residents. "There
could be a positive
impact during the
construction phase,
with some jobs, but
once it is done it is
going to benefit large
companies and not
the people who live
here. That is always
the case with these
2016
2017 e
kinds of projects,"
he says.

Tapping markets
The road to exports in Peru has largely
been paved withfree-trade agreements
signed with most of the world's major
economies since the start of the decade.
The country has implemented 16 trade
agreements since the watershed pact with
the US in February 2009. More than 90%
of Peru's $36.8 billion in 2016 exports were
covered by free-trade agreements, according to the Mincetur. The central bank put
the country's trade surplus at $1.7 billion in
2016 and just shy of $4 billion for this year.
Agricultural exports reached 98 countries
in January, according to the most recent
data from the Agriculture and Irrigation
Ministry. Still, Peru is not finished with its
trade talks. It has been in negotiations with
Turkey since 2014, and talks are scheduled
to begin in June with India. The deal will
represent India's first "next generation"
trade agreement in Latin America and will
include not only goods and services, but
also investment parameters.
"India is going to be an important
market for us," says Trade and Tourism
Minister Eduardo Ferreyros. "We see
tremendous potential for agriculture, fruit,
vegetables and grains in a market with
more than 1 billion people."
The government, in the meantime, has
been working to perfect existing agreements by eliminating non-tariff barriers,
particularly phytosanitary inspections that
deem shipments free of harmful pests and
plant diseases. Last year, it got pomegranates and figs added to the list of products
entering the US, which, Mincetur says, will
add another $80 million to export earnings.
It has negotiated five separate phytosanitary protocols with China since the freetrade agreement was implemented in 2010.
The first air shipment of blueberries was
dispatched last November, while the first
shipment by sea arrived in Guangzhou,
China, at the end of February.
"Free-trade agreements have opened
new markets, giving Peru comparative
advantages that other countries in the same
position do not enjoy. Trade agreements
are also important to investors, because
they provide clear rules that are respected,"
Carrión says.
Pointing to last year's $5.5 billion in
agricultural exports, Ferreyros adds, "We
need to be ambitious. We should think not
about doubling agro-exports, but aim much
higher. I see no reason for us not to see $20
billion as a target." LF

May/June 2017 - L ATINFINA NCE.COM 35

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