In the next decade, Peru’s rapidly expanding modern agriculture business will double its formal employment opportunities thanks to the creation of another 780,000 jobs, according to Apoyo Consultoria. Produce Business UK speaks with some of the country’s leading fresh fruit and vegetable suppliers to learn what’s being done to sustain the growth of the industry as well its surrounding communities and environment. We also find out how the UK might be able to help
The number of people employed in modern agriculture across Peru had already risen from 433,000 to 822,000 between 2004 and 2014, according to a report compiled by Apoyo Consultoria and commissioned by the Association of Agricultural Producer Guilds of Peru (Agap), with indirect employment accounting for a further 900,000 jobs.
During the course of the last 10 years, the number of direct jobs created by agriculture businesses – including grower-exporters Camposol, Danper, Complejo Agroindustrial Beta and Sociedad Agrícola Virú – has risen by 6.6% on average each year.
Thanks to the explosion of Peru’s agriculture business, poverty is starting to reduce along the country’s coastline, where the vast majority of fresh fruits and vegetables are grown. Today, less than three out of 10 agricultural workers are considered to be poor – a significant reduction on the seven out of 10 recorded only a decade ago, according to Apoyo Consultoria’s report.
What’s more, the study found that although only 19 out of every 100 agricultural workers are positioned in formal jobs, their income grew at twice the rate of the figure achieved by casual workers. Between 2004 and 2013, the monthly salary of formal workers increased from 530 Nuevo Sol (£109) to 940 Sol (£193), while that of casual labourers rose from 255 Sol (£52) to 466 Sol (£96).
This growth – an annual rate of 3.6% – is three times higher than that of Peru’s construction sector, which increased at a rate of almost 1% per year during the same period, and up to two times greater than that of the country’s manufacturing sector, which rose at an annual rate of 1.6%.
Greater employment opportunities ahead
In Trujillo, northern Peru, the construction of the Chavimochic irrigation system, which has opened up an expanse of new production areas for agricultural crops, has created 50,000 direct jobs and 150,000 indirect jobs, according to Ulises Quevedo, CEO of Grupo Rocío, a major agricultural company that focuses on poultry, cattle and fresh produce – the latter being managed by its subsidiary Tal SA.
The rapid emergence of Peru’s blueberry industry is set to generate more fresh produce employment opportunities, in particular. With each hectare of blueberry orchard requiring the management of 10 workers – compared with one per hectare for avocados or two-to-three per hectare for asparagus – this new trade will generate tens of thousands of jobs for Peruvians.
“The impact will be huge not only on the availability of employment but also income,” explains Quevedo, whose agribusiness arm Tal SA is one of the leading blueberry growers in Peru at present.
“Blueberry pickers receive twice as much [in salaries] as other crops because it’s so labour intensive. We [at Tal SA] are also providing a good education for our workers’ kids and a nice environment in which to work.”
Grupo Rocío is a family-owned food group, employing around 6,000 people in total. Quevedo expects to create another 6,000 jobs in the near future thanks to the development of its blueberry business alone.
At Camposol – Peru’s other emerging blueberry giant – the firm’s US$140 million (£92.2m) investment into new blueberry facilities, from production areas to packing facilities and equipment, is expected to open up an additional 10,000 positions. Camposol is already the third largest employer in Peru.
“Camposol is also embarking on a building project in Peru to house the influx of workers and their families in the areas around the new growing regions,” reveals chief commercial officer José Antonio Gómez-Bazan. “This will include schools, health and transport services and other key infrastructure elements, and forms part of our stated commitment to CSR as our business increases in size.”
Produce firms drive investment in ethical projects
With a reported lack of governmental support for CSR projects along Peru’s coastline, over the years many Peruvian produce companies and some international groups have taken it upon themselves to invest in both the current and future generations of the agricultural communities they are creating, to, in turn, safeguard the longevity of their businesses.
“We are trying to raise Peru to a better level; an improved standard of living,” explains Quevedo, who adds that the Peruvian government is focused largely on lower income people living in the highlands and jungle, rather than the coast, which is a much smaller area.
“We need to create real opportunities for the future, and bring opportunities to low income people,” Quevedo continues. “We have a responsibility to support our communities and our people, as well as to make money as a company.”
Quevedo says the produce business is especially keen to avoid the mistakes made by the mining industry in Peru, which has invested greatly in operations in the highlands but not the local communities. “There has been a lot of debate and social unrest surrounding the mining industry in Peru,” he reveals.
Indeed, while the mining sector generates most of Peru’s GDP, Quevedo points out that it’s the agriculture sector that brings the most labour benefits. As a result, while CSR was pretty new to Peruvian produce companies 10 years ago, now he says it’s internalised in most business strategies. “It’s the only way to sustain not just your business but also your communities,” he states.
At the top, Peru’s umbrella grower organisation Agap continually strives to introduce the world’s best practices into Peruvian produce companies. At present, Agap is working with the International Labour Organization (ILO) on a programme called Score, which aims to improve productivity, sustainability and job quality in small to medium enterprises.
Alejandro Fuentes at Agrícola Don Ricardo concurs that most companies are instilling CSR initiatives both as part of their business model and within their values to either be or become more social and environmentally responsible. “There are companies at different stages of the journey but most of them are following this path,” he says.
Despite the apparent lack of governmental support in some areas, Fuentes still encourages other Peruvian producers and exporters to work hand-in-hand with government institutions. “It’s a win-win situation for both parties and most importantly for the community,” he states.
“There are huge opportunities in aspects such as health and education. Every area [of Peru] is different, therefore each company has to do their own analysis to find out which are the things that matter the most to their communities.”
Agrícola Don Ricardo works with the Peruvian government’s health institutions (EsSalud and Minsa) and education institutions (Minedu), in particular. Mostly, they provide the firm with the technical expertise, such as speakers, doctors or nurses, while the company manages the other aspects required to put together a programme to benefit communities. Normally, the ideas come from Agrícola Don Ricardo, but what Fuentes says is key is that both parties work together as a team to make things happen.
Education is a primary goal
Ricardo Polis of Agrícola Hoja Redonda describes CSR as a “sentiment” that is growing every year in Peru, adding that his company forms part of a Peruvian group called Breca, among whose core objectives is to harness a better place in which to live for its workers.
“Large and medium companies are looking to improve the quality of living and work of our people,” he notes. “Some companies support educational programmes or health programmes, while others are focused on infrastructure.”
Above all, Polis believes education is the “one big issue” in Peru, especially the lack of quality in teaching. “The government is working on it,” he reveals. “In the last five years there has been an improvement and I believe we are on track, but there is still a lot of work to do.”
Grupo Rocío’s CSR efforts are focused mainly on education, and the very quality aspect that Polis says is missing. The firm works with a Peruvian non-governmental organisation (NGO) called Enseña Peru to bring graduates from the top universities in Peru to spend two years working at rural schools.
“We finance the project,” Quevedo says. “We receive those students in the rural areas where we operate to improve the education of the children living there. It’s only been running for two years but already we’ve increased the learning skills from 10% to 80%. It’s having a huge impact on our community. We are adding one school to the project each year and we will try to keep doing that.”
Education is a long-term investment, however, notes Quevedo. “You don’t see short-term paybacks but that’s not what we’re looking for,” he states. “Already, because of our CSR efforts I see our workers are identifying more with our company.”
Camposol operates a wide-ranging social responsibility policy that includes the preservation of biodiversity, monitoring of carbon and water footprints. use of integrated crop management, and training staff in these areas.
The group was also the first Peruvian agroindustrial company to become part of the United Nations Global Compact and also the first to publish sustainability reports with independent third-party validations, using the Global Reporting Initiative (GRI) indicators.
Similarly, Grupo La Calera, which, like Grupo Roció, operates across the agricultural industry from eggs to fresh produce, finances a number of CSR initiatives from education, and housing to social schemes.
“CSR is very important to La Calera,” explains the firm’s Estuardo Masias. “Less than a year ago we set up Fundación La Calera (La Calera Foundation) by bringing together five or six of our different entities that were working on CSR.
“We’re putting all of our efforts under the umbrella of that one foundation; whether it’s for education, housing or social programmes. The funding comes from all of our own companies although we don’t rule out accepting support from third parties in the future.”
Masias says there are many other produce companies in Peru who are following La Calera’s example. “They have become more aware,” he explains. “In our district [Ica] we often substitute the central government by funding improvements to roads and schools. Other produce companies have seen what we’re doing and have started to copy.”
Ica-based Agrícola Hoja Redonda decided to focus its own CSR efforts and resources in three different areas: education, health and family. “This decision was made after an analysis we did in 2011, with the help from an external consultant, to determine which were the areas that matter the most to the communities around Agricola Don Ricardo,” Fuentes explains.
“Being socially and environmentally responsible is part of our DNA. Since our foundation, the communities around us have been our partners. Both our business and community have grown and improved in the last 20 years. The quality of life of the people that live close to us has improved significantly in the last two decades.”
The company’s ethical efforts have also helped to cement relationships with UK buyers, according to Fuentes. “We have been serving the major retailers in the UK for more than one decade without having any incident or claims related to CSR,” he says. “There is no better proof of that than the long lasting relationship we have developed with them over the years.”
Why and how UK buyers should get involved
But the work is by no means done. While great strides have been made and although most Peruvian operators now comply with a range of international certifications – including: BSCI; GlobalGAP; IFS; HACCP; and BRC among others – all those involved admit there is so much more to do.
With UK buyers among the most demanding in terms of requiring on-going ethical commitments and improvements from their suppliers, Peru’s produce players suggest they too should lend a hand in the efforts being made on the ground, at the source.
“My personal point of view is that everyone in the supply chain should get involved in CSR efforts,” says Fuentes at Agrícola Don Ricardo. “The reality today is that in most cases each link of the [supply] chain is doing its own thing without getting other links of the chain involved.”
Indeed, Quevedo laments that the efforts made by Grupo Rocío are merely “a drop in the ocean”. “We’d like to see our clients, our government and every NGO helping to improve Peru,” he remarks. “It’s good that UK retailers and buyers are asking for CSR efforts from us. But they could invest in our projects too. UK buyers should definitely get involved.
“For example, we have a nice relationship with Nature’s Pride in the Netherlands [an importer which strongly believes in a fair living and working environment for everyone]. Financial support helps a lot – we can do a lot with that – but it’s also about offering your time to support us.”
In taking an active role, Quevedo says buyers would become closer to the agricultural communities behind their supply of produce and witness first-hand the impact their support can have.
Fuentes at Agrícola Don Ricardo notes that there is a multitude of ways that UK buyers can get involved. “They can share ideas that have been successful in other places or countries, offer financial support, help with advisory committees for CSR issues and visit the communities around our businesses to learn first-hand the needs’ of the people.”
Agrícola Don Ricardo also works with Nature’s Pride and Fuentes highlights this collaboration as a good example of a positive and sustainable relationship between supplier and buyer. “This year for the first time Nature’s Pride has joined Agrícola Don Ricardo in an education programme for kids at elementary [primary] school called Aprender para Crecer [Learn to Grow].
“This programme lasts three years and it represents an important effort from both companies to improve the levels of reading and maths in three different schools in the La Tinguiña district of Ica. It’s supported by Empresarios por la Educación and will benefit 38 teachers and 1,050 students.”
At the end of the day, Agrícola Hoja Redonda’s Polis says Peru needs all the help on offer. “Peru is still a third world country and we have a lot of needs, so all support is welcome,” he points out. “UK buyers can get involved in many ways – for a start by supporting the consumption of Peruvian produce and by providing information about Peru in terms of what we do, how we work and what we have to offer.”
Masias at La Calera agrees that when you look at the progress made on paper it looks like a great deal, but in reality it only scratches the surface. “When I’m out in the fields and I see the poverty in the streets I know there is still a long way to go,” he comments.
“We want to achieve a better standard of life for Peruvians, for our communities and ourselves. We want to help reduce the violence and drug usage and enhance education. This, in turn, will benefit us as a company. But there is still so, so much more that we need to do.”
In a recent interview with Produce Business UK, Nic Jooste, marketing and corporate communications director at Dutch produce importer-distributer Cool Fresh International, spoke about how treating CSR as a collective asset can lead to tangible gains for all parties involved.
With real benefits in terms of both internal and external sustainability on the table and Peru shoring up its position as an even more important counter-seasonal supplier to the UK, the time is ripe for more supply chain partners to get actively involved in Peruvian CSR programmes.
If you’d like to get in touch with any of the companies involved in this article to lend your support, send us a message at [email protected].
Read other articles in PBUK's Sourcing Spotlight on Peru:
Martin Morales on why Peruvian cuisine means much more than just ceviche
Blueberry growers in Peru respond to UK retail requirements
The irrigation projects transforming Peru’s produce prospects
Peru offers the UK a paradise of opportunities to discover
Peru presents significant opportunities for discount chains
Wider demand and greater availability add up to strong growth for Peru avocados
Peru set to dominate early seedless grape window with extensive offer
Growers building buyer loyalty and status for Peruvian citrus
Market opportunities for Peru stretch across the purchasing spectrum
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