Mario Mustafá, President, Ecosac: Interview

Interview: Mario Mustafá

Given the rapid growth in aquaculture in recent years, what are the main challenges to continuing the segment’s expansion going forward?

MARIO MUSTAFÁ: An important factor that has facilitated growth has been predictability – specifically given that aquaculture is less exposed to climatic events such as El Niño than traditional fisheries. This allows the industry to better plan and produce year-round.

Road and irrigation infrastructure continue to be the most significant challenges, which also affects the country’s competitiveness as a whole. This is a notable handicap in the jungle regions, where the development of aquaculture is not profitable due to current high transport costs.

One particular issue for aquaculture is that irrigation systems have to be built by each company individually. This is different from agribusiness, where state support in Peru has helped to build the necessary irrigation infrastructure. Despite all of this, shrimp farming has become the main niche product in Peru, and has grown through the implementation of new technologies, which has allowed for production of up to 8000 kg of shrimp per hectare, a level of productivity that far exceeds Peru’s neighbours.

What impact is the current global economic downturn having on agribusiness exports, and which markets are gaining prominence?

MUSTAFÁ: Asian markets, once competitors, have grown to the point that they are now net importers of food products. Among them, China is leading the demand for Peruvian agricultural and fishing products, though other markets are also gaining momentum, such as Hong Kong, the Philippines and Thailand.

The current economic downturn has affected the sector in several ways. First, domestic players have become more competitive due to the devaluation of the sol against the US dollar. This has increased demand and thus growth. Second, from a national perspective, it has provided the sector with an opportunity to address the human capital challenge that has been developing in recent years. Unemployment is nearing record-low rates, with some regions close to zero, and it is becoming more difficult to find the right people to work with. Investment in research and development and automation needs to be increased in order for the sector to continue its growth story.

How will the Trans-Pacific Partnership (TPP) affect the local agricultural and fishing sectors?

MUSTAFÁ: Peru has opened its economy over the last decade by signing a wide number of bilateral trade agreements. Not only has this opened our domestic market to international competitors; it has also enabled national agribusiness to flourish by increasing exports to these countries. As a result, Peru already has an internationally competitive agricultural sector, thus the TPP is not expected to have a significant impact in terms of additional competition.

How will the development of national transport infrastructure improve the efficiency and productivity of agriculture in the coming years?

MUSTAFÁ: Road infrastructure has improved markedly in the last decade and this will continue under a public-private partnership approach. Nonetheless, congestion on existing roads is a bottleneck, though it is also a sign of the country’s progress. This affects agribusiness as many transported products are perishable. Jungle regions remain poorly connected and this continues to turn investment decisions away from these areas. While most products are still transported via Lima, this logistical issue is being addressed through the development of regional ports such as Paita, which aims to reduce congestion by providing an alternative transportation route for businesses in northern areas of Peru.