Irrigation key to agricultural expansion in Peru

Against a backdrop of increasingly severe climate events, inefficient and small-scale irrigation systems, and an untrained workforce, government intervention in farming is poised to play an important role in maintaining and improving the country’s agricultural output. Although Peru has access to nearly 2% of the world’s freshwater, its irrigation systems urgently need to be modernised, while action is required to mitigate the effects of the annual El Niño climactic phenomenon. Stakeholders are looking to use tailored approaches to address key challenges in water access and provision.

Infrastructure

The availability of water resources varies considerably throughout Peru; according to the most recent agricultural census, which was conducted in 2012, around 63.8%, or 4.5m ha, of farm lands are rain-fed, while 2.58m ha remain reliant on irrigation systems. Roughly 57% of that irrigated land is located in the desert areas along the coast. A further 38% is found in the Andes, while the last 5% is in the jungle.

The country’s irrigation systems are managed by both public and private actors. Recently the government moved to make irrigation infrastructure a priority, and the Ministry of Agriculture and Irrigation (Ministerio de Agricultura y Riego, MINAGRI) announced in October 2018 that it planned to increase the amount of irrigated lands overseen by the government by 132% to 59,700 ha in 2019. To this end, 37% of the PEN2.2bn ($666m) budget for agriculture has been designated for irrigation infrastructure and river defences in 2019.

While this spending should help address inefficiencies in the system, there remain a number of challenges. According to Máximo Hatta, an independent consultant for agricultural engineering and water management, irrigation infrastructure continues to be hampered by both structural and non-structural issues. “The current irrigation infrastructure is highly deteriorated, and most of the water application infrastructure uses basic gravity irrigation,” he told OBG. “There is also a lack of training and public or private technical assistance in operations and maintenance of existing irrigation systems and irrigation agriculture in general,” he added. The delivery system is very inefficient, and 65-70% of irrigation water is lost due to leaks.

According to Hatta, the formalisation of property and water rights could present several other challenges. “There is a lot of informal property, and a large percentage of agricultural land is managed by the people living on it. Due mostly to financial limitations, they work on a small scale. Thus, the government, especially through MINAGRI, should implement an extensive strategy to develop massive irrigation areas to benefit farmers that lack the capacity to do so,” he told OBG.

Addressing Challenges

To address such concerns, MINAGRI has organised a number of initiatives to better train farmers and close the sector’s extant capacity gaps. In November and December 2018 more than 500 farmers from the Andean regions of Ayacucho, Arequipa and Tacna participated in workshops on water efficiency and productivity management, focusing on key export crops such as avocados, purple corn and olives. The training was part of broader efforts to mitigate the recent and impending impacts of climate change through local technology transfer.

MINAGRI also launched the Agromas project in early 2019 to improve water access and usage efficiency in 12 regions. The plan received an initial investment of PEN329m ($99.6m) as part of a broader plan to increase food exports to $10bn by 2021 (see analysis).

According to Gustavo Mostajo, a former head of MINAGRI, systemic inefficiencies must be addressed in order for the programme to succeed. “With this programme, we guarantee that any government-driven intervention has technical support from production organisations, and they can directly insert themselves into the market, ensuring this is a sustainable model,” Mostajo told local press in November 2018.

Additionally, the government has made it a priority to recover from the consequences of El Niño in 2017, which caused flooding that destroyed homes, crop allotments and agricultural infrastructure along the coast in the first quarter of that year.

To repair the damage and rebuild communities, in September 2017 the government approved PEN25.65bn ($7.9bn) to fund the Reconstruction with Changes programme. In August 2018 MINAGRI received approval to complete 25 hydraulic infrastructure reconstruction projects in the areas that were most severely affected by El Niño, valued at PEN71.5m ($21.6m). The 2019 budget set aside a further PEN600m ($181.6m) to conduct 350 interventions at 57 critical points along the watershed and river system, in order to curb the scope of damages in the event of future storms.

Furthermore, under the auspices of the 2021 Bicentennial Plan, the government has committed to extending rights to 1.37m ha, or around 53% of the total irrigated area. These measures aim to amend the country’s outstanding water usage rights and move towards the sustainable management of water resources.

Public Policy

The government’s irrigation strategy is guided primarily by the National Agrarian Policy (Política Nacional Agraria, PNA), as well as the National Crops Plan (Plan Nacional de Cultivos, PNC) 2018-19. The PNA was established in 2016 to make agriculture more competitive and sustainable through the implementation of 12 different policy axes, foremost among them the modernisation of water resource infrastructure.

Meanwhile, the objective of the PNC 2018-19 is to strengthen and support productivity and diversification among smallerholder farmers, in part by discouraging the planting of crops that utilise what is considered an excessive amount of water. “Agricultural irrigation uses about 80% of available water in the country,” Sakota told OBG. “Boosting efficiency means that more water would be available to supply other areas or for other uses, such as drinking water.”

Key Crops

Peru has identified a half-dozen crops – cotton, potatoes, rice, yellow hard corn, white soft maize and onions – as key to meeting the specific objectives of PNC 2018-19. The cultivation of these crops has accordingly become subject to stricter regulation and oversight. In addition to being integral to the government’s water reduction strategy, these six crops are significant drivers of productivity and employment growth, in part by supplying stock for activities in other economic sectors. Potato and rice yields contribute a combined 24% to subsector GDP, while cotton is integral to the national textiles industry. Additionally, all of the listed food crops are staples of the Peruvian diet.

To prevent an over- or under-supply of these goods, the PNC 2018-19 provides production estimates through a national survey to track how much farmers are planting. In 2019 the production of cotton and white soft maize is expected to grow by 47% to 60,000 tonnes and 4.8% to 465m tonnes, respectively, while reductions are expected for potatoes (5% to 5.2m tonnes), rice (9.4% to 2.96m tonnes), yellow hard maize (5%, to 1.27m tonnes) and onions (23.7% to 617,000 tonnes). Any reduction in rice production can be attributed to the water-heavy nature of its cultivation: paddies require approximately 15,000 cu metres of water per ha on the coast and 16,000-18,000 cu metres of water per ha in the jungle, well in excess of other calorie-rich starches.

Project Pipeline

National and regional authorities have also initiated work on a range of vast irrigation projects on the coast, though financing and bureaucratic interruptions have resulted in some delays. In the north-western region of La Libertad, the first two stages of the Chavimochic system were built between 1986 and 1995, adding 46,000 ha of new and improved irrigated land to the region. The project has supported development of the Chao, Virú and Moche valleys by almost tripling the harvested area and developing 45,000 direct and 35,000 indirect jobs, and in 2018 La Libertad led the production of exported avocados. The third phase of the plan will create 63,000 ha of newly irrigated land and enhance irrigation in 48,000 ha in the nearby Chicama Valley; however, it is currently stalled due to political and contractual disputes.

Similarly, Majes-Siguas II was initiated by the regional government of Arequipa in 1971 in two planned phases. Unlike Chavimochic, Majes Siguas Phase I highlighted various difficulties, such as high water usage and low investment capacity, as well as the fact that individual farmers tend to own only small parcels of land, that result in subpar profit. By Phase II, technological modifications were recommended based on these challenges, which increased the scheduled budget by $110m.

The Arequipa regional government has not secured this sum, the Ministry of Economy and Finance has not provided the additional funding and the project could potentially be delayed beyond 2019. It is estimated that if Chavimochic III and Siguas II are completed, the two could generate $1bn annually in avocado exports due to the increase in arable lands.

While it remains unclear how and when the projects will resume development, such large-scale operations are expected to be significant in improving irrigation infrastructure and cultivating new agricultural land.