Required Report - public distribution

**Date:** 6/9/2004

**GAIN Report Number:** PE4008

PE4008

**Peru**

**Asparagus**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Melinda D. Sallyards

U.S. Embassy

**Prepared by:**

Gaspar E. Nolte

**Report Highlights:**

Asparagus production is expected to reach 190,000 MT in CY 2004,
increasing 1.5 percent compared to the previous year. With exports of
\$206 million, asparagus became the lead agricultural export in CY 2003.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Unscheduled Report

Lima \[PE1\]

\[PE\]

Executive Summary

Asparagus production in Peru is expected to reach 190,000 Metric Tons in
CY 2004, increasing about 1.5 percent compared to the previous year.
Asparagus became the largest Peruvian agricultural export in 2003,
moving the historical largest export, coffee, to a second place.
Asparagus exports contributed a record of about \$206 million in export
sales in CY 2003. Exports of processed asparagus reached 50,821 MT in
2002 while fresh exports were 67,089 MT, mostly to the U.S. According to
the industry, international demand for asparagus has reached a mature
point, and its growth in the near future will not be as sharp as it was
in the 1990s.

This crop grows in the irrigated coastal valleys of Peru. There are two
well-defined production areas. La Libertad, in the northern region of
Peru, produces white asparagus, which is processed (canned or jarred)
and exported to Europe. Ica, 300 kilometers south from Lima, produces
green asparagus mainly for fresh export to the United States market.
Arequipa, a thousand kilometers south of Lima, is also starting to
develop production of this crop.

+---------------+-------+------+------+------+------+------+------+
| ###           |       |      |      |      |      |      |      |
| ### PSD Table |       |      |      |      |      |      |      |
+---------------+-------+------+------+------+------+------+------+
| **Country**   | **P   |      |      |      |      |      |      |
|               | eru** |      |      |      |      |      |      |
+---------------+-------+------+------+------+------+------+------+
| **Commodity** | **    |      |      |      | (HA) |      |      |
|               | Aspar |      |      |      | (MT) |      |      |
|               | agus, |      |      |      |      |      |      |
|               | Fr    |      |      |      |      |      |      |
|               | esh** |      |      |      |      |      |      |
+---------------+-------+------+------+------+------+------+------+
|               | 2002  | Rev  | 2003 | Esti | 2004 | Fore | UOM  |
|               |       | ised |      | mate |      | cast |      |
+---------------+-------+------+------+------+------+------+------+
|               | USDA  | Post | USDA | Post | USDA | Post |      |
|               | Off   | Esti | Offi | Esti | Offi | Esti |      |
|               | icial | mate | cial | mate | cial | mate |      |
|               | \[    | \[N  | \[O  | \[N  | \[O  | \[N  |      |
|               | Old\] | ew\] | ld\] | ew\] | ld\] | ew\] |      |
+---------------+-------+------+------+------+------+------+------+
| **Market Year |       | 01/  |      | 01/  |      | 01/  | MM/  |
| Begin**       |       | 2003 |      | 2004 |      | 2005 | YYYY |
+---------------+-------+------+------+------+------+------+------+
| Area Planted  | 19000 | 1    | 1    | 2    | 0    | 2    | (HA) |
|               |       | 9800 | 9000 | 0000 |      | 0000 |      |
+---------------+-------+------+------+------+------+------+------+
| Area          | 17000 | 1    | 1    | 1    | 0    | 1    | (HA) |
| Harvested     |       | 8198 | 7000 | 8200 |      | 8300 |      |
+---------------+-------+------+------+------+------+------+------+
| TOTAL         | 1     | 18   | 18   | 19   | 0    | 19   | (MT) |
| Production    | 85000 | 7221 | 5000 | 0000 |      | 2000 |      |
+---------------+-------+------+------+------+------+------+------+
| Imports,      | 0     | 0    | 0    | 0    | 0    | 0    | (MT) |
| Fresh         |       |      |      |      |      |      |      |
+---------------+-------+------+------+------+------+------+------+
| TOTAL SUPPLY  | 1     | 18   | 18   | 19   | 0    | 19   | (MT) |
|               | 85000 | 7221 | 5000 | 0000 |      | 2000 |      |
+---------------+-------+------+------+------+------+------+------+
| Exports,      | 60700 | 6    | 6    | 7    | 0    | 7    | (MT) |
| Fresh         |       | 7089 | 5000 | 0200 |      | 2000 |      |
+---------------+-------+------+------+------+------+------+------+
| Domestic      | 6000  | 6000 | 6000 | 6000 | 0    | 6000 | (MT) |
| Fresh Market  |       |      |      |      |      |      |      |
+---------------+-------+------+------+------+------+------+------+
| For           | 1     | 11   | 11   | 11   | 0    | 11   | (MT) |
| Processing    | 18300 | 4132 | 4000 | 3800 |      | 4000 |      |
+---------------+-------+------+------+------+------+------+------+
| TOTAL         | 1     | 18   | 18   | 19   | 0    | 19   | (MT) |
| UTILIZATION   | 85000 | 7221 | 5000 | 0000 |      | 2000 |      |
+---------------+-------+------+------+------+------+------+------+

  ---------------------------------- ------------------------------------
  **Export Trade Matrix**            

  **Country**                        Peru

  **Commodity**                      Asparagus, Fresh

  Time Period                        CY 2003

  Exports for:                       

  U.S.                               53128

  Others                             

  Spain                              5312

  Netherlands                        4266

  UK                                 2764

  Total for Others                   12342

  Others not Listed                  1619

  Grand Total                        67089
  ---------------------------------- ------------------------------------

Units: Metric Tons

Production

Asparagus production in Peru is expected to increase around 2,800 MT to
190,000 MT in 2004. In 2003 production increased 3.4 percent to 187,221
MT, recovering from a slight fall in the previous year. According to the
industry, international demand for asparagus has reached a mature point,
and its growth in the near future will not be as sharp as it was in the
1990s. Post forecasts asparagus production at 192,000 MT in 2005.

Peru is one of the few countries where high quality asparagus is
produced year round, due to warm, favorable weather in which the
asparagus plant does not enter a dormant stage. Peru produces asparagus
for two different markets: green asparagus for the United States, and
white asparagus for the European market. Green asparagus, which is about
40 percent of total production, is sent fresh to the U.S. packed in 5
kilogram boxes, while white asparagus is processed then exported in cans
or jars to Europe.

![](media/image2.wmf)

Agriculture along Peru's coast, has been, and still is, changing. Though
the new Land Law has not been implemented yet, the current land tenure
is allowing land consolidation, which in turn attracts investment.
Though capital flow has been limited recently due to political unrest,
fresh capital in the agricultural sector is looking to invest in an
exportable product, and asparagus is a profitable crop with a fairly
stable foreign demand.

In an effort to increase production, some asparagus growers, especially
in the northern areas, have been planting at a very high density. As a
result they are harvesting more per hectare, but the asparagus come out
thinner without the proper quality for the market. The processing plants
reject a large proportion of this asparagus because it does not meet
export quality standards, and as a result the processing plants are
finding it increasingly difficult to buy sufficient good-quality
asparagus.

**Crop Area and Yields**

Production area is estimated to be 20,000 hectares in 2004, increasing
about 1,000 hectares from the previous year. Harvested area is expected
to have a slight increase to 18,200 hectares. Even though production and
capital credits are unavailable or expensive, especially for the medium
size and small producer, and production costs are rising, asparagus is
still a profitable crop. Farmers in the coastal valleys of Peru are
attracted to asparagus more than any other crop, because of the
possibilities in the international market.

Average yields are around 6 tons per hectare, but can reach as high as
18 tons per hectare among some of the most efficient producers.
Asparagus producers in the Ica region (south of Lima) are usually more
efficient. Because surface water only flows from November to March, most
producers have wells and drip irrigation systems, which make water
available but expensive, due to the high local cost of fuel. Green
asparagus production requires more water than white asparagus.

Trade

Processed asparagus exports reached 50,821 MT in 2003, and are expected
to increase around five percent in 2004. Fresh asparagus exports were
67,089 MT in 2003. With total exports at around \$206 million per year,
asparagus became Peru's lead agricultural export in 2003, surpassing
coffee for the first time. The U.S. continues to be the largest market
for Peruvian fresh asparagus, accounting for 79 percent of the market in
2003. With 47 percent of processed asparagus exports in 2003, Spain
continues to be Peru's most important customer in this market, followed
by France, the U.S., and Germany. ![](media/image3.wmf)

Most Peruvian exporters agree that the world asparagus market has
reached a mature level. Since asparagus supply in the U.S. has increased
faster than demand, Peruvian exporters have seen a sharp reduction in
prices. Ten years ago a 5-kilogram box of fresh asparagus sold for \$50
and now it can fall as low as \$9 a box, when the California harvesting
season begins. Usually Peruvian producers start sending their crop to
the market between mid June and September at prices ranging from \$14 to
\$16. Some producer even try to hold their crop for Thanksgiving or
Christmas when prices reach their highest.

![](media/image4.wmf)

Chinese asparagus exports are a major source of worries for Peruvian
asparagus producers. Ninety percent of Peruvian agricultural exports,
including asparagus, enter duty free to the European Community. Despite
the 16 percent import duty assessed to Chinese asparagus, it still is
cheaper than Peruvian. Though China only affects the processed asparagus
market, it has reduced asparagus prices in Europe sharply in the last
two years.

Another difficulty that Peruvian exporters have to face is expensive
freight. Historically air freight cost from Lima to Miami has been
around \$0.85 per kilogram, current cost is \$1.25 per kilogram. The
main reason for this increase is the lack of merchandise for the
come-back freight. Currently, freight is up to 40 percent of the total
cost of the landed price in the U.S.

In February 2002, APHIS declared that all fresh Peruvian asparagus
needed to be fumigated against copitarsia. At the Peruvian producers'
request, APHIS has approved a pre-clearence program which will be
implemented as soon as the Peruvian producers finish evaluating
alternative methods for fumigation.

Policy

The GOP does not have an official policy to encourage asparagus
production. Most of the GOP's effort is on the marketing side through
"Prompex" (the export promotion committee). This rather new organization
has been active and has had some success promoting agricultural exports.
Prompex activities include a commercial mission to the Produce Marketing
Association (PMA) annually in the U.S. Producers have been satisfied
with the outcome of this activity and have been able to contact new
potential customers, especially supermarket chains.

Asparagus exporters have implemented a check-off system to financed
marketing programs which include consumption promotion, phytosanitary
protection, quality control certification and an information system to
supply producers with the latest developments on worldwide and national
production and prices. All these activities are carried out by the
Peruvian Asparagus and Horticulture Institute (IPEH), which was
established in 1998, in an effort to increase their marketing activity
as well as improve relations with the government. IPEH was very active
in the negotiations to sign the extended ATPA (ATPDEA) and is now being
very proactive in seeking a favorable outcome of the U.S-Peru Free Trade
Agreement negotiations.

Peruvian asparagus producers are very concern about the U.S.
bioterrorism legislation and the possible negative effect on their
business with the U.S. So far, they have not had major problems, but
they are still concern about administrative detention, because they
claim that the criteria for detention are not clearly specified.