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This report is not to be published nor may it be quoted as representing the Bank's views.

No. E. 186

! r ' .J

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

AGRICULTURE IN PERU

A REPORT TO THE MANAGEMENT OF IBRD

BY

DOUWE GROENVELD

October 12, 1951

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TABLE OF CONTENTS

I. Summary and Conclusions

II .. The Agricultural Environment Area and Use Soil Quality Agricultural Population Number and Size of Farms

III. Agricultural Output Agricultural Production Livestock, Dairy and Meat Production Food Situation National Account for Agriculture

IV. Special Aspects and Problems of Peruvian Agriculture

Land Tenure Situation, Rentals and Pur-chase Prices of Land

Tools and Requisites Marketing and Transport Agricultural Polic1.es

V. Agricultural Credit in Peru

TABLES

I. Cultivated Area per Department II. Agricultural Production in Peru

III. Geographic Distribution of Wheat Production IV. Geographic Distribution of Rice Production

V. Geographic Distribution of Cotton Production VI. Geographic Distribution of Sugar Production

VII. Food Consumption per Capita in Kg~ per Year

Page Nos o

1 - 2

3 - 7

8 - 17

16 - 23

24 - 27

VIII. National Account for the Agricultural Sector of Peru IX. Wholesale Prices in Sales for 1950 X~ Average Retail Prices January/September 1950

XI. Details on Types of Loans made by the BQA.

APPENDIX

Details about the land Tenure Situations

Map of Peru Bibliography

OTHER . .. ...

AGRICULTURE IN .PERU , t t

T~ts paper was written by an agricultural economist of the Bank's staff who visited Peru in March and April 1951, in order to study agriculture in that country.

The courtesy of the ~tinisterio de Agricultura in Lima and the Servicio Cooperativa Inter-Americano de Produccion de Alimentos (SelPA) greatly facilitated the work of the writer and enabled him to see a great part of the coontry.

This is a report to the management of the lBRD and does not,. reflect the views or pOlicies of the Directors or management of the Bank •.

Washington, D •. C. October 1951.

AGRleULTUBE IN PERU

I. SUNMA.RY A1ID CONe LUSI Oii!'S

In considering the agricultural aspects of the l'cJ:'Uvian economy it is necessary constantly to keep in mind that Peru has three very different agri­cultural regions:

(1) The Costa, where nroduction is completely dependent on irrigation of some 40 small valleys~ Here farming is concentrated around large estates operated by quite modern methods. The output is mainly export crops (sugar and cotton). and rice.

(2) The Sierra, agriculturally speaking a region of high •. cold plains used chiefly for extensive grazing, an.d of elosed-in valleys ,;,here food is pro­duced by bac~$ard methods on small farms~

(3) The I-lontana., 8. tropical :rainfall region with good possibilities for gro\'Ting all kinds of tropical prGd,ucts. but lacking means of transport and the necessary labor force. The main possibilities for expansion of agriculture are l hO'flTever. in thi s region.

Normally 1.5 million ha. are under cultivation in Peru. ot which 250wOOO ha. are devoted to commercial crops, The rest of the acreage is used to raise food crops. The main cent.ers for commercial crops are Piura. (cotton), Lambayeque (sugar)~ La Libertad (~~r)t Lima (cotton), and lea (cotton), The proposed irrigation projects are located in these Departments.

The soils in the coastal valleys are generally highly productive pro­vided they are correctly irrigated. The Sierra soils are not particularly fertile; and only 30% of the Ivlontana. soils are considered good. provided they are well cultivated and fertilized.

More than 1.5 million Peruvians, or t'!t!D-thirds of the lI'lorking popUla­tion. are engaged in agriculture, v!orking on some 700tOOO farms. Proba,bly .07% or 5.000 of these farms are large, some very large, and 70% are smaller than 5 ha.

The main food crops are wheat, barley, corn. rice, potatoes and s'!tieet potatoes, and the export crops are sugar and cotton. Over the last IS years food nroduction has increased by some 20% but the population has expanded by 33%. Cotton production declined at first but is now rising; sugar production has increased by 20%. Rice, cotton and sugar are tyPical products of the coastal valleys; the others are mainly nroduced in the Sierra,

Yields per ha. of crons gro~m on the well irrigated and well managed coastal haciendas are'generally high, whereas yields of food products grown by the 600,000 or 700,000 small peasants ar~ very 10"1.. The small farmers use very old-fashioned implements, they s,re not familiar with modern agricult~al

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science, and they lack money and knot'!le(lge to improve their farms.

Though statistics sho1r1 that the number of livestock increased more or less at the same rate as the human population, there is a general lack of good draftan1mals, and a shortage of meat and of dairy products. This is mainly due to lack of technical kno1rrledge, lack of slaughtering facilities in the cattle areas. and tre.nsportation difficulties. :!vIeat and milk have to be inported, a..'ld eVen then the diet of the Peruvians is poor.

The national accounts for the agricultural sector shoYl that the fin­ancial position of the medium sized ani large farmers is currently probably rather satisfactory, so that it may no~·; be the right moment to launch a vig­orous modernization program. But the success of this program might be hampered by the land tenure situation characterized on the one hand by very lcrge estates which are either under-utilized or partly leased under feudal conditions to many small peasants, and on the other hand by many small holdings which are too small for efficient cultivating. Land prices are not a serious proQlem at the moment but they 1Ili11 be if the prices of cotton and sugar should fall.

Except on the coastal estates the mechanica.l equipment of the farms is very poor. In some regions even the pIo1ll is unknO\vll.

Guano is the main fertilizer but too little is produced to cover all needs. Imported fertilizers are considered too high in price by farmers who are not aware of the benefits that 1Ilould accrue in terms of higher yields.

Cooperatives are practically 'anknown in Peru; all merchandizing is done by private traders who, as a consequence of the many small~ nearly isolated com­munities and be.d. transport conditiorls, can easily exert some kind of monopolistic a.ction.

Except for taxes and some T.):romotion of irrigation vlOrks, the Government exerts very little control over agriculture. The nucleus of an experimental and educational organization exists, but it should be activated. enlarged and co­ordinated with the similar services of seIPA (Servic::.o Cooperative Interamerical10 de Produccion de .I\~l:lmentos), a.ncl of private organiza·i;ions. The contact bet"Jeen these services and the farmers ought especi€tlly to be strengthened.

As t~ agricultural credit,. the outste,nding 1Joint is thc:t the medium sized farmers need help. They p~rticularly lack facilities to get medium and long term loans it the Banco Agricola being the only institution 1Ilhieh extends such credits to e very limited degree ..

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II. THE AGRICULTURAL ElWIoommNT

Area and Use

One of the most characteristic facts about agriculture in Peru is that this sector of the economy consists of three almost coopletely different and separated tynes of agriculture. The areas \'There these types are found are -.,ell described in the IIPrologo ll to the 1946/48 report on the Experilnental Station in Tingo Naria:

"A1l Peru is divided into three parts; the nCosta"t the IISierra" and the lll'4ontana ll •

The "Costa"'t lying between the Pacific Ocean and the rlestern Range of the Andes contains approximately 10% of the land area of the country. This region is largely desert and cultivation is limited to areas pos­sible of irrigation. At present only 5% of it is irrigated with the possibility that sufficient water can be developed to irrigate an ad­di tional 5%.. The rest "lill remain desert.

The "Sierrall, consisting of the high mountains and plateaus lying be­t\V'een the ~'Jestern and Eastern RangeS of the Andes contains approximately 30% of the land area of the country. This is a region of treeless plains and slopes '''hich have been used to capacity for cultivation and grazing for more than C'_ thousand years. Possib111 ties for tncreased production here depend on the extent to ';1hich cultural me'l;hods can be improved,;.

The ''Ivfontana ll, lying bet'lrleen the Eastern Bange of the Andes and the

Brazil border contains approximately 60% of the land area of the country~ l-iost of the regio.n is covered 'II/i th forests 'lrlhich are producing valuable lumber and other forest products. Rainfall is ample to maintain these forests and to produce agricultural crops and pastures on the better so~ls. Although less than 1% of this area is now in use for agricul­ture, preliminary surveys indicate at least 30% to be suitable for this purpose. Possibilities for expansion of agriculture in the "Montall.:'1." are therefore many times greater than in the I1Costa lt or "Sierra" regions. 1I

In the coastal plains (the Costa), an important part of the'altivated land, all of 'lrlhich must be irrigated, is used by big estates to produce chiefly commercial crops (cotton, sugar cane and rice)~ These estates are especially well operat..f;d and they use modern agricultural me'thodso The rest of the land is used by smali and medium sized farmers who raise mainly food crops, such as maize, potatoes, vegetables and fruit. and animals for slaughtering.

In the Andean vaileys of the Sierra most of the arable land is divided up into very small units, which are cultivated by small Indian farmers vlho use centuries old, traditionalized methods. The land is either owned by the small farmers,'or by the old traditional communities. The valleys usually have enough rainfall, and these farms produce mainly food crops (potatoes and wheat). The

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rest and by far the larger part of the Sierra. is very extensively used for livestock ranching.

East of the Andes one find.s the enormous tropical rainfall jungle of the Amazon basin, kn01!Tn as the Montana. Along the tributaries of the Amazon are· s1 tuated a number of tOil/llS. mostly small. The areas surrounding the towns are used for tropical farming. The Montana and Selva themselves are very sparsely populated, chiefly by Indians who use some of the land for a primitive form of shifting cultivation. They also collect some forest products, including nuts and rubber.

According to a study by SCIPA the total area in use for agricultural purposes is 15 million ha •• 14 million of which are located in the Andes and Iviontana. This figure 'is rather misleading, because 13 million of these 14 million ha •• are permanent pastUre of very low productivity,. The cultivated area is less than 2 million ha., and of this total normally only 1.5 million ha., are actually in use. These '1.5 million ha. are distributed as follows: for com­mercial crops. 250.000 ha.; as cultivated pasture. 150.00 ha.; for food 1,10C.000 ha. :More details can be found in Table I. Although this table is based on data for 1942/43. it also reflects the current situation.

Table t shows that one_sixth of the cultivated area is devoted to in­dustrial crops, the rest to food production. Usually, however, the best soils are used to raise cotton and sugar, so tl1at actually more than one-sixth of the agricultural capacity is turned over to commercial crops. The main Departments growing these crops are J?iura, lambayeque and tiber tad in the north •. and Lima­Callao and lea in the central coastal area. Important to food production are all the northern Departments, except Tumbes, all the central Departments, and Ar­equipa, Cusco. Apurimac and PuOo of the southern group. (See the maps in Appendix Btl reprinted from Preston E. James, llLatin America ll .)

Complete data about the irrigated area are not available, but this area is estimated ~t present at nearly 500,000 ha,. divided over some 40 valleys separated by huge, bare deserts, The expert on Peruvian irrigation, C.W. Sutton, states that":-1n fl,pprox1me.tely 1900 the irrigated area ",as only 250,000 ha. Govern­ment works account for 80.000 he. of the total increase, the rest (of which )0,000 ha. are irrigated by pumping from wells) is due to priVette 1!lorks. Sutton estimates that there is \-later enough to irrigp.te 2 million ha. t and he made pre­liminary investige.tions for nearly 20 irrigation \-Iorks 1!lhich l'lould add 489.000 ha. to the present cultivated area. and imnrove irrigc.tion on )04,00 r.a. already in use. :BJngineering ,,,ork can not be started on most of these projects because very fel'l of them are in the blueprint stage as yet.

Soil Qp.ali til

Rather good general information is available on the quality of the 'Soil. According to the nSalem Survey Report on Irrigation" (pages 16 - 20). the soils in the Costa may be classified among the world's most productive. They are, hO\-Iever. short of phosphorus and humus and often Sh01!l an alkaline reaction. For that reason it is very profitable to fertilize them with ammonium SUlphate. In

- 5 -

general the soils in the Costa are of the alluvial type, of varying texture and of light' alkalinity "lith occasional acid patches. In general the soil lacks nitrogen, and :plant nutritional value varies from year to year depending on the sedimentation introduced by irrigation, a :phenomenon "'hieh is accentuated by the great variety in the water flow of the irrigating rivers. One should make a dis­tinction between the soil of the ne", areas, Nhich have not yet been under ir­rigation and which often have a some",hat higher location, and the lo\ver soils in the old valleys. The soil of new a.reas is frequently seudy because the finer material has been transported' by erosion to the 1m-rer, older regions or to the sea. These regions have dee'O, mostly silty seils of a clay-loam tyPe, 1-lith a high content of crop producing mineral elements. IiJinera1s are constantly re­newed in the ~lell irrigated area "'hich results in a high yield of rice, sugar and co t ton.

In the Sierra arable soils are found in both the semi-arid and semi­humid regions. They are in various ste.ges of decay or lateritization.

~n the i4ontana, most of the upper Amazon region is rolling, frequently broken. terrain ,,,ith relatively deen cuts formed by rivers. Because of heavy leaching, the ~rocess of laterttization in the soils of the up~er Amazon is well advanced. They have a high aluminum and iron oxide content, are low in bases and high in acidity (pH of 4 - 5).

The surveys of the Tingo Maria Station sho\-I that the lands in the 2'Ion­tana can be divided into three distinct groups: alluvial soils, sedimentary soils and residual soils. Only the alluvial soils can ~~pport intensive agri­culture. and they cover a relatively small proportion of the Montana. '.:ith good fertilizing the alluvial soils give yields of bananas, beans. corn and s\'leet potatoes, t<rhich are as high or higher than those of other comparable tropical regions. The sedimentary soils, l·rhieh are found in 70: of the region have a high aegree of acidity (p..B: 4 - 5), low fertility and ncor drainage. They are at present used for a form of extensive shifting cultivation, in 1.-rhich the land is t<lorked for 1 - 3 years and then abandoned. The residual soils have much in common \1ith the sedimentary soils. but they are situated on the slopes of the Cordillera Azul. 1.1hen cleared they are subject to serious erosion. These soils produce valuable timber, and. are very suitable for tea production, Studies are in :orogress to determine "lhether the land e8.n be employed for coffee plantings or for pastures.

A~ricultural Population

AccorGing to the Census of 1940, which is the most recentavailabls. Peru had an actively em~loyed labor force of 2.5 million in 1940 of whom 1.550,000 or 62.5;' '<lorked directly in the agriC'-lltural sector. Of this total, 1.3 million \i'ere engaged in raising crops amI an additional 250,000 took care of livestock. The latter grouT> a.lso includes those engaged in forestry, fisheries and horticulture. To this number s.hould be added, in order to estimate the total number of Feruvians ".rho earn their living in or connected ~li th the agrarian sector, those v;ho trade, transport or process agricultural products. There are no statistics available for this category, but it has been estimated that at

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least 50,000 people work in the food and drink processing industries~

Of the people engaged in agriculture proper 28j& are women; 'It,hile in the livestock and fishing industry 49% of the 'ltlOrkers are "lOmen, an unusually high percentage.

About 100,000 of the agricultural popu1~tion live in the Departments of Ancash, Ayacucho t Cajama.rca, Cusco, Junin. La Libertad, Lima, Piura and Puno, \1hereas nearly one-third (or 76,000) of those who take care of livestock are concentrated in the Puno Department.

The Census also gives the following occupational breakdown in the agri­cuI tural field.

The Agrarian Populatio~ §2.D)-divid.ed ir.to Oc.c1J.patillnal Catee;or:ies

( thOTl.eanc,s)

Agri cu1 tUre Livestock

Employers fl.nd Proprietors 510 42 Employees 4 1.2 Laborers 339 163 Horking members of the

farmer I s family 273 27 Independents 161 :::.0 Position not clear 6 1.2

Total 1,293 254

Probably those who are listed as "inde"endentsn are also small farmers, so that the total number of farmers may 'oe calculated at 671, 000 in agriculture proper plus 62,000 in the livestock busin~ss, or a total of some 730,000 people. Assuming that. as an average, every larger fnrm has one employee, we estimeted that the country has approximately 5,000 larger farms.

The Census also gives date. about the number of worlrers engage.:! in cultiva­ting particular crops, but those figures are probably highly inaccurate except, perha-ps, for those concerning cotton and suge.r ca.ns. Cotton production is said to employ 85,000; and sugar cane, 46,000. These tt,to groups together",constitute only 10% of the agricultural \-fork force, b'.lt they nroduced nearly 30/) of the total gross ~,alue of a.gricultural production.

In considering these date. one should keep in mind that especially in the cotton areas part of the \'.'ork is done by neople from the Sierra "'ho imlnigrate to these valleys in the neak seasons. These migr;;mt \-lorkers are i!!l!,ortant to the cotton growers during the seasona.l neaks. The ,,!ork is equally important to the i~~abitants of the Sierra, since for some of them this is nearly the only op­portunity to earn a cash income. Some of the highland communities other,1ise live almost com~letely outside the money eeonomy.

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Detailed data are available on wages paid to agricultural laborers in different parts of the country in 1949 and 1950. They shaw that in general wages in the Amazon area and in the Andes were low (S/1.50 up to s/4 per day) compared to wages in the Costa (S/7 up to S/9 per day). For special jobs such as drivin~ tractors wages went up to S/15, or 1 US dollar per day. Often laborers get their meals at the haciendas and in those cases the money wage was one to two Soles less than for laborers who bought their ovrn food.

Number and Size of Farms

SCIPA undertook, with the assistance of the Ministeries of Jevelopment, Finance and Labor, an interesting study on the distribution of farms according to size. Because this study was made on a more or less sample basis and because the results are not ve~J accurate, only the percentage data for Costa, Sierra and Selva has been used in this report.

Distribution of Farms over Size Groups in Percent of Total per Re~ion

Costa Sierra Selva Peru

o - 5 ha" 78.0 64.6 8001 72.9 6 - 10 ha.' 10.2 8.5 6.6 9.5

11 - 50 ha. 8.3 13 .. 6 6.0 10.3 51 - 100 ha. 1.3 3.4 2.0 2.1

101 - 500 ha. 1.7 5 .. 3 2.3 3.1 501 and more 0.5 4.6 3.0 2.1

Total 100.0 100.0 100.0 100.0

Not included in these data are the 137,694 Indian farm units diskibuted over the 1,322 communities inhabited by 1 million Indians. None of these units is believed to be larger than 5 ha. They are located as follows:

Northern area Central area Southern area Oriental area

22,322 90,821 22,923 1,623

137,694

Even if the Indian communities are not taken into account, the distri­bution table above discloses that approximately three-quarters of all the Peruvian farms are very small, less than 5 ha., an(l. that 20% are cetween 6 and 50 ha. (normal farm unit). Even more interestinc is the great number of small units in the Costa; 78% of the total have less than 5 ha., and 19;; have between 6 :'ncl50 ha. The Sierra has a rather large number of good.-sized farms (13% with more than 50 ha.), but vie should keep in mind that this group includes a great number of cattle ranches, llhich have a very low production per ha. No data are available on the number of hectares occupied by the various size groups.

III. AGRICULTullAL OU'IPUT

Agricultural Production

Due to a lack of ~rstematic data inconsistencies are always encountered when production statistics for a series of years are compared with each other. Table II shows the most reliable production data available for the last three years. Some information about seven of the chief products is given below.

1P1heat Barley Maize Rice Potatoes Sugar Cotton

Agricultural Production

Area 1934/38 1947 1950-·

(thousand ha.)

109 175 280 43

285 52

171

1/ Hulled. Y Ginned.

142 179 324 46

146 50

120

146 186 166

33 199

51 120

1934/3~ 1947 1950 ~housand metric tons)

76 118 452

86 1/ 820 -382

84 Y

127 129 208 213 612 251

99 1/ 107 1/ 672 - 1115 -479 452 65 Y 74 Y

Only the data about wheat, rice, sugar and cotton are reasonably reliable; those on maize and potatoes are probably questionable.

The geographic distribution of the main crops is given in detail in Tables III, IV, V and VI. In general wheat is Grcr~n only in the mOlh~tair.ous parts of nearly all the Departments. The main Tlheat p:' oducers are the DepartmeJ~ts of Cusco, Huancavelica and Junin, in the center and southern part of the c01mt!"'J.

Rice, on the contrary, is a typical coastal product and so are cotton and sugar. The main rice producing De;Jartments are Lambayeque, La Libertad and Piura, all in the north. The cotton growing regions are found in the JeDartnents of Ica, Lima - Callao and Piura. The first t;-NO are located in the c;nter of Peru and the third is in the extreme north of the country. Sugar production is concentrated in two northern regions~ Lambayeque and Chicama y Santa Catalina o

Cotton, sugar and rice thus are more or less competing with each other for space in the irrigated coastal plains, whereas wheat production is not influenced by changes in these areas because it is grown in the mountainous regions.

Of the cotton production of 60 - 70,000 tons, only one-fifth is used in Peru; the remaining 50,000 tons is exported.

Sugar production is nearly 500,000 tons, of which some 180,000 tons are consumed internally and approximately 300,000 tons are available for export.

A SClPA report on the "Food Situation" during 1942/43 provides addi­tional data on agricultural output. Corn is produced allover the country but heaviest output is in the north in the Departments of Cajarnarca, Libertad and Ancash; other important corll producing De;?artments are Junin, Lima, Callao and Ayacucho in central Peru, and CUBeo and Apuriroac in the south. Potatoes are also grown allover Peru, but the real potato belt is located in the Depart­ments of Puno (in the Sierra) which accounts for one-fifth of national produc­tion. Other important potato areas are Cajamarca and Ancash in the north, Junin in the center and Cusco in the south.

A more detailed analysis of agricultural conditions and practices will be given later, but some general remarks may be made here. The first is, that every student of crop statistics in Peru must be struck by the amazing variety in yields per ha., both geographically and from year to year. This is less true for the two main export crops, cotton and sugar, than for the food crops. The reason is that the export crops and rice are produced on large well irrigated farms, Yihich have managers ·with enough training and information to avoid crop failures. But the majority of the food crops are grOt'm on less well irrigated farms, or on farms in the Sierra wp.ich are dependent on rainfall. These crops are grown by small farmers who knO'Jlr no more about agriculture than their fore­fathers centuries ago. They have very little contact with extension officers who could instruct them about better cultivation methods.

The second general remark is, (again with the exception of cotton, sugar, and rice) that yields per ha. in feru are generally very low (Tiheat, Boo kg/ha., potatoes, 3000 - 7000 kg/ha.), and for the same reason: production is in the hands of illiterate peasants unfamiliar with modern agricultural methods ..

These observations lead to one important conclusion: a very large in­crease in food production may be expected if the work of the government agri­cultural services could be concentrated, say for 10 years, on stimulating production of wheat, potatoes, maize and manioc by small and wedium sized farmers allover the country. It would probably be much cheaper to increase production by this method than by extendin~ the irrigated area. Of course, it is not our inteniion to belittle the importance of irrigation works, but on the contrar.r to underline the importance of the r:ork of the other services.

Livestock~ Dairy a~d Meat Production

Statistics in this field are probably even less reliable than data on crop yields. There is no doubt that Peruvian agriculture needs more draft animals, and in fact in many areas the farmers have no draft animals at all. This is partly due to the steepness of the terrain, but it is also a consequence of the poverty of the people and of their inability to invest in good breeding animals. Other contributing factors are lack of technical knowledge and of good fodder.

An overall picture of the number of livestock, based on official estimates is given en the following page:

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Number of Animals (thousands)

~ 1947 1950

Horses 432 453 550 Asses 277 349 432 Mules 130 123 159 Cattle 1843 2662 2833 Pigs 689 775 960 Sheep 11198 17288 17718 Goats 640 962 1093 Poultry 3185 9500 9100

These figures sharf a general and favorable increase OYer a period of some two decades. The increase in anilTla1s used for human food rras on the whole as great as the increase in population, although the country is still very short of meat and dairy products. Except for sheep, 'iirhieh live on the enormous grass pampas of the Sierra, the livestock population is low for such an extensive country as Peru. Horses, asses and mules add up to a total of 1.1 million, or Ii transport animals per farm. The 3e3 million llamas are used more for general transport purposes. The horses l the mules and part of the cattle (oxen) are also used for plowing and other agricultural work, but their performances are poor due to insufficient feeding and to the use of obsolete farming equipment. ,Eeat and milk production have also been held down by inst~ficient feeding and by marketing problems. Assuming that no less than 1 million of th.: cattle are cons, and using the milk production figure for 1947, e.g. 300 million kg., it can be estimated that one cow produces no more than 300 kg. a year, or 2 kg, a day for 150 days of the year. The majority of the stock are the Criolla cows, an in­digenous variety. There is, hoyrever, a growing though still small Group of dairy farmers who are trying ':li th the help of the Ciovernment and th:- Banco Agricola, to build good dairy herds by importing high quality breeding cattle (mainly from the l1etherlands). The COl'fS on these farms produce much more per day and per year (10 - 20 and more kg. per day).

The meat production was estimated in 1948 at:- (FAa Yearbook 1949)

31,000 tons beef and veal 3.9 kg. per year per head 19,000 tons pork 204 kg. per year per head

8,000 tons mutton and lamb 1.0 kg. per;rear Der head " "-58,000 tons total

The serPA publication "The Food Situation in Peru" gives detailed but probably unreliable information on the distribution of livestock, and of meat and dairy production over the country. This part of the report makes it clear that most of the meat is produced in the: Sierra. It is a common practice to take the thin cattle of the Sierra pampas to alfalfa regions (for instance near Arequipa), where they are fattened, and subsequently tranBported to Lima, the main market. This practice is, especially under present transport conditions, very uneconomic, as cattle lose much ~'1eight during transportation. If the better areas of the pampas were fenced in and more extension and educational work w€re

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done~ many Sierra peasants would be able to produce suitable meat-cattle. Then part of this cattle could be slaughtered in the Sierra areas and the meat could be brought to Lima by truck~ 'ilie rest could be fattened anG slaughtered in the alfalfa areas above Arequipa.

Because of the 101"[ milk yjeld and the inadequate technical ImoTrledge of the farmers~ production of butter and cheese is very lov-r. SCIPA states that 2400 tons of butter VIere produced in 19L~3 (concentrated in CajaDarca, Junin, Arequipa and ?uno). According to the 1"1.0 Yearbook butter production was only 2,000 tons in 1948, and cheese production was 8,000 tons. Cajamarca, Junin, Cusco and Puno are important cheese rroducing regions" All data u.'1derline t,yO things: (a) that livestock raising is backward, and (b) that it is largely con­centrated in the Sierra, the natural grazing area. The peasants of the Sierra greatly lack technical knowledge. For instance, because they do not know hew; to make butter, which is one way to preserve milk, milk yield of the cows is neglected and only the meat and hides are considered useful products.

Sheep and hogs are raised in the-Departments of Cajamarca and Junin (enormous high pampa), Cusco and especially Puno. The goats are concentrated in the north, especially in Piura.

Food Situation

Any remarks on the food situation should take tyro factors into consid­eration: (a) because Peru is divided into a great many rather isolated regions, data about average food consun~tion do not give a true picture of the situation. In some valleys a certain product may be abundant but there may well be a de­ficiency of other nutritional elements; in other valleys the situation may be just the reverse; (b) since production data are inaccurate, consumption data necessarily can not be taken at face value.

There are tv:o series of data, the FAO food Balance ::iheets and tile ';:;CLoA report on "'Ihe Food Situation in Peru". Though they are both:Jartl~T C:eri vecl from the same basic cata, and though FAO makes use of the SeIPA report, th:j results of the calculations sometimes differ widely. Data from both reports are cO!.lbined as much as possible in Table VII.

The FAO Food Balance Sheets have converted the per capita food cons1L~p­tion into calories, as sh~vn below:

Per Capita per Day 1935/39 1947

Calories 1861 1925 Animal protein (gm.) 13 .. h 13.5 Vegetable H (gm. ) 42.2 38.6 Fat (gm. ) 36.5 34.9

The low level of meat consumption is one of the critical points in the food situation of Peru. Practically all the slaughtering for Lima, the chief marketing center for meat, has to be done by the Frigorifico Nacional situated near the port of Callao. Slaughterings there show a very renarkable developn:ent.

1928 1940 1941 1946 1948 1949 1950

- 12 -

Number of Slaughterings at the Frigorifico Nacional, Lima

Cattle

67 118 124

64 52 57

110

(thousands)

Sheep

72 137 135

48 51 44

158

Goats

0.5 4

33

17 42 48 15 53 49 41

The decline in the number of animals slaughtered from 1941 to 19L.9 "fas due to a too strict price policy of the Government. In 1943 the authorities became aware of the results of this price policy and tried to improve it by "upgrading" the meat, so that whereas in 1940/41 only 2~; of the ;::eat vras classified as "extra II, this percentage went up to 83 and 91% in the next tyro years. 1nis difference in classification did not change matters for the farmer, who considered the official prices he got for his anLlla1s were too low, there­fore he did not sell more animals to the Frigorific 0 , and the ml.'ilber of slaugh­terings remained loVT. j:,Iany animals Yiere, hov/ever, sold to the black market. The situation did not improve until 1950, vfhen meat rrices rrere alloned to rise considerably and supplies increased accordingly. As a result of the improyed internal supply, imports of frozen meat were diminished from 18 million kg. in 1949, to 6.4 million kg. in 1950, without a corresponding decrease in meat con­sumption. Leat consumption is now probably at the preViar level, which Vias very low at best. If appropriate policies are adopted, it should be possible for Peru to be self-sufficient in n:eat within a relatively short period.

The data in Table VII show that there has been a slight improvement in the consumption of cereals and tubers (starches), but consumption of eggs, milk, c;heese and butter remains extremely low. It is probably safe to conclude that the supply of starchy foods (wheat is largely imported), fats, vegetables and fruits is not so bad, but that there is a great deficiency in the intake of an­imal proteins. Though the fishing industry is expandin:s; rapidly, and though the Govern.ment ,'rants to improve cattle raising, all efforts shadd be concentrated on an increase in the production of wheat, meat and milk. The nece,sity for this is emphasized by the fact that 407; of the goods imported by- Peru are food­stuffs, of which vrhea t is the main item.

- 13 -

Quantities of Prod~~ts Im}orted (thousand metric tons

1948 1949

I'mea t pI us flour 150.6 215.h Id1k, condensed and

3.4 8.4 evaporated Meat, fresh and pre-served 14.0 15.6

A.l1 food products 196.7 262.1 Non-food products 311.1 349.6 All imports 507.8 611.8

Between 1948 and 1949 there was a remarkable increase in the quantity of Ylheat and milk imported. '111is is partly due to the inf1tL"C of people from the Sierra into the cities, with a consequent change in diet from corn and potatoes to wheat. Overall import statistics for 1950 are not yet available, but a large quantity (62,000 tons) of rice had to be imported because of a crop failure in the northern part of the country. In normal years Peru is self-sufficient in rice.

The SeIPA report also provides data on consumption by Departments. Con­sumption is highest (450 kg. per capita per year) in Lima, and is lowest in s11ch districts as Huancavelica and Huanuco (some odd 250 kg.). It seems highly im­probable that kilogram intake could be so much lower than in Lima for people living in the agricultural region of the Sierra, vnlere large potato crops are harvested.

National Account for Agriculture

The main data for 1949 are shovm below:

Million Soles

Raw materials bought 1272 Salaries, wages and earnings of family members 3343

Depreciation, interest and investments 325

Taxes 285 Profit 259

Total 54B4

Statistics for this section were obtained from the lIBanco Central de Reserva", and on the basis of these data Table VIII was compiled to show the amounts in S()les, the increase of the different items since 1945, the relative importance of different items, and the variations in this relative importance.

The item II earnings of family members" in Table VIII (participacion

14 -

patronos, colaboradores independientes y otros) needs some clarification. In this item are combined the earnings of smaller farmers and of the members of their families who 'i':ork their own farms. The !learnings of family members ll also includes such paJ~nts as rentals in money, products or labor, plus payments to independent people not being regular wage earners. It is a pity that the Banco Central did not separate these i terns, for it is nO'liv impossible to see vlhich part of the agricultural production went to the production factor "soil I'. Neverthe­less these tables allow us to make the following interestin; observations:

(a) the amount of Soles spent on raw materials increased at exactly the same rate as the wholesale, prices of domestic and imported articles. Because the selling prices of agricultural products increased faster than those of raw materials, the total value of the crops also rose steeper than the value of bought raw materials, and consequently, t~."e importance of the item rfraw materials" in the cost account drop~Jed h points.

(b) the items "salaries and wages paid ll rose less steeply tha.'1 total income, but together they went up faster than the cost of living (1945, 202, and 1949, 430, when 1934/36 is put at 100). .

(0) there was a large increase particularly in the !learnings of family mem­bers"" which represent a good part of the IX ofi ts made by agriculturists, In 1949 these earnings were nearly five times as high as in 1945, and the relative importance of this item rose from 30% to 44% of total. This is partly due to the moderate increase in "salaries anc1 wages paid II , and in such fixed-costs items as depreciation and interests paid. Declared profits also increased moderately. Though 1950 data are not yet avail­able it is very probable that lIearnings of 'farrily members" were even more important in 1950 than in previous years.

(d) the item "depreciation" is very low, and this may well be an indication of the law Ifpr ope nsi ty to save II Ylhich is prevalent in La tin American countries.

(e) the item "investments" shows a remarkable increase for 1949, which is steeper than the increase in prices, and , .. "hich may indicate the response of the entrepreneurs to the favorable relation between costs and income. They tried to expand their productive potentialities by buyirg machin~ry, breeding cattle, and by investin..:; in irrigation works, pU!Jlps, etc. It is very likely L~at this activity also took place in 1950 and 1951.

(f) Itta:x:es" increased at the same rate as wholesale prices of raw materials, but less than prices of products sold, so that the relative importru1ce of ~'taxes" dropped from 6.2 to 5.2%. This indicates that there riight be space for heavier taxation.

(g) the item "interests" is very low; it indicates only interest paid, and not the interest which should be calculated on all the capital invested in agriculture. But even so this item is probably too l~~, considering that the commercial banks and the Banco Agricola in 1949 loaned a total

- lS -of nearly S/300 million loans to agriculture. This does not include loans made by private persons. Even so the item "interest ll

, amounting to S/15 million in 1949 would indicate an inter'est rate of 5%, which is decidedly too low for Peruvian conditions.

(h) as already explained, the item "profits" only indicates "profits declared!!, so that the larger part of profits is included in "earnings of family members ll • "Profits" run parallel to the index of wholesale goods.

As a whole Table VIII gives the impression that Peruvian agriculture since 1945 is in a favorable position, with selling prices rising more than impol'tant cost items such as ra::w materials, wages and "fixed costs".

... 16 -

IV. SPECIAL ASPECTS AND PROBLEHS OF PERUVIAN AGF.rCUL~

In this chapter some special aspects of Peruvian agriculture will te described, which vdll provide an opportunity to go into related problems and to make some suggestions for their solution. The follo~dng subjects will be covered; the land tenure situation, rentals IDld purchase prices of landJ agricultural tools and other requisites, especially fertilizers; marketing and transport of farm products; and finally the agricultural policy of the Government, ",nth special reference to the experiment stations and extension Horke A special chapter (No. V) will deal 't-uth the financial position of the farmers, their need for cre­dit and the way in lflhich those needs are met.

Land Tenure Situ~tion, Rentals and Purchase Prices of Land

Though there is no factual irlformation on this point it is obvious that both in the Costa and the Sierra most' of the agricultural land is in the hands of large Oimars who either exploit it themselves or lease it to small farmers. Small o-vmers own only an insignificD11t part of the lando A special feature of the i\ndean valleys are the old Indian communities, which have a legal status, and govern quite an important part of the agrj.cultural land in that area. As a rule the farmers who live on the high ll.ndean plateaus ov..'!l the land they use, whereas in the Andean valleys most farmers who are not members of an Indian community are tenants.

It villl not be possible to increase agricultural production quickly because:-

(a) many 18.rge mmers h2.ve too extensive an area to look after, so that they neglect part of it; hO'l'1ever, a number of large haciendas are operated expertly;

(b) many small tenants 'tv-ark under too 1.ll1certain conditions, so that they are not interested in making improvements;

(c) many small farms (rented or owner-operated) are too small for efficient oper~.tion;

(d) the Indian communities are too much tradition bound.

Some interesting detmls about the land tenure situation are shm·m in Appendix A.

It is understood that there are no statistics, or even recent estimates about the amount of rent actuall'T paid per ha. in the various regions. A gen­eral, theoretical rule is that annual rent will be 20% of crop value, and the same percentage lias privately estimated by the SCrPA agent in Huanuco (Sierra). This seems 10vT, especially in the Costa uhere there is a shortage of land 1711ich probably makes the rent much higher both absolutely and in relation to production. This lack of data makes it impossible for the Government to formulate a policy on this important subject, but on the other hand lack of interest is probably re­sponsible for the lack of data. As a matter of fact, there is no governmental policy on land tenure, land prices or land ownership.

~ 17 ...

Some data about the situation in 1943 are to be found in a SCIPA report on liThe Food Situation in Peru" (page 34). They indicate that rent at that time was very low in the Montana (12 Sales per ha. for a ranoh near Iquitos), and on the highlands of the Sierra (5 Soles near Huanuco), but that on the other hand it was very high in the Arequipa irrigated region (up to 1000 Soles per liar in the low zone). Other examples vary between 100 and 500 Sales per ha. _

More data are available on the purchase value of lando The Technical Body on Land Valuations maintains a system of appraising land from which the foIl-owing general survey was obtained.

a/ Value of Agricultural Land in Peru-, (Soles per haT

1st CIa!.,!! 2nd Class ~rd Class Itth Claru! Costa: North 3500 - 5000 2000 - .3$:)0 1000 - 2000 100 - 1000

Central 6000 - SOOO 5000 ... 6000 4000 - 5000 750 - 4000 South 5000 - 6500 4000 - 5000 3000 - 4000 500 - 3000

§.ierra: North 1000 - 2000 ,500 - 1000 100 - 500 50 - 100 EI Central 1000 - 2000 500 - 1000 100 - 500 5 - 100 Y South 3000 -16000 1500 - 3000 500 - 1500 40 - 500 Y

Montana: 1000 - 2500 500 - 1000 --- 100 - 500 Less than 100

~/ The equivalents in $ per acre are for instance:-1st class land in the north Costa $ 220 - 312 1st class land in the north Sierra $ 63 - 126 1st class land in the Montana :~ 63 - 156

£I Natural pastures.

Though these prices are much too low in terms of the present situation, they indicate the great differences in land values between Sierra and Costa, and between the Northern, Central and Southern areas. Especially in the central coast region (Lima) and in the southern Sierra region (Arequipa) land prices are very high. In the Montana land is still very cheap. Current aotual prices are much higher than those given above, as the following exwaples show:-

(a) In the valley of Lima, at distances of approximately 25 km. from that city and connected with this market by good roads, first quality land costs 30,000 Sales per ha.; second quality, 20,000 Sales; third quality, 10,000; and fourth quality, 5000 Sales.

11 As at that time the exchange rate was 6.5 Sales per $1.0, these amounts are equivalent to:-

$0.75 per acre in the Montana; $Oe3 " " " " Sierra; up to ~p63 per acre near Arequipa; between 76.3 and ~37 per aore in other examples ..

- 18 -

(b) In the cent.ral Costa, the price of fourth class land with irrigation possibilities, is 5000 Soles per hat

(c) In the Arequipa area and in the valleys of Moquegua and Tacna, where there are many small farms, land prices go up to 50,000 Soles per ha ..

(d) Lands suitable for grape or olive oulture are ve~y expensive, 35,000 Soles per ha., and 55,000 Soles per hat, respectively.

At the present moment the price level of agricultural land is not a widely ~scussed problem which is quite natural, in view of the interest focussed on the very hign prices of the main products.

Tools and Requisite!

Very little. definite information is available about the tools used by Peruvian farmers. In discussing farming implements a sharp distinction should be made between the tools used on haciendas in the Costa and in some of the Sierra valleys, and those used by the peasants.

The tools used by all the peasants in. Peru and also by the colonists in the Montana are very simple and old fashioned. The most common implement is the old wooden plow (with or without steel point) which when drawn by oxen or mules sQratches the soil for a depth of only 10 or 15 centimeters. In some areas (for instance the colonization area around Tingo Maria), they do not even use a plOW but simply make holes in the soil with a machete. This is probably the most important tool of the peasants, .though they also use a sort of chankol, or hoe, and the spade. For threshing they still use animals to tramp the grain, or they flail it by hand. In some regions SCIPA does very valuable work by plowing and tilling the land of farmers. Not only is the quality of this work much better but it also makes the farmers aware of the existance of modern tech­niques, Equally important drawbacks are the lack of technical knouledge and capital (credit) which prevent farmers from buying modern toolse Both of these factors hamper the development of Peruvian agricultUre, however, the latter can be remedied more quickly than the lack of technical knowledge.

The most modern equipment is found on the sugar estates. The other haciendas are in between these extremes. In 1949 Peru had 2500 tractors (a good indicator of the extent of mechanization), 17;0 of which Vlere Vlheel ~ractors", All these wheel tractors and probably 600 track-laying traotors were in use in agriculture. It is estimated that more than 90% of the tractors were used by cotton and sugar growers throughout the Costa, and the rest mainly by rice growers in the northern part of the Costa. As there are probably some 5000 large estates (some of them used only for cattle ranching), the number of tractors is not yet high. Considering that the large number of farms are between 10 and 100 hat (of which there are may be more than 50,000), the number of traotors is still very low. The same is true for the number of plows. Because the domestic production of plows, harrows, etc., is very small, most of Peru's agricultural tools are imported. Chief source of supply is the United States which in 1948 exported to Peru 2416 plows, and in 1949, 1132 plows of which 639 were tractOr plows. The overall import of

- 19 ...

handtools is also low, amounting to 633 tons in 1948 and 914 tons in 1949. Assuming that a tool has an average weight of 5 kg. this means that there is an annual import of 130,000 or 180,000 tools, for 105 million workers (one tool in 10 years per worker).

Farm buildings are usually of inferior quality and give only poor protection against insects and rodents e The problem of crop storage is not so serious 1n the dry coastal plains as in humid areas, but in the Montar.a there is a great need for better storage.

The most important fertilizer in Peru is, of course, guano. Production, distribution and transport has been completely under control of the Compania Administradora del Guano since 1909. This government agency is so successful at controlling the excavation of guano and protecting t~e birds on the guano island that continued though inadequate production for the future is assured. Since 1942 extraction has increased rapidly, but as some experts are of the opinion that there is a seven year cycle in the production due to alterations in the Humbolt Current,lt is possible that there will soon be a temporary decline in guano production and extraction. This would create a ;serious situation because in the past decade production has not met the demands of agriculture. For this reason exports have been practically eliminated since 19400

1909 1933 1938 1942 1947 194? 1950

Extraction and Use of Guano --- (thous. m. tons) --

Extract2!i Petitioned by ligriculture

70 36 162 103 170 263 79 226

163 346 194 355 230 (provisional datum)

Sold to Ag­!:icultu~

24 115 149

83 168 162

46 49 17 .

The gap between the amount of guano asked for, and the quantity actually provided is striking, but one should keep in mind that because buyers know that they will ~ot get all the guano they ask for, the requested amounts ~re probably strongly exagg~rated. Data on allocations of guano show that preference is given to producers of foodstuffs. In 1949 petitioners of guano received the following peroentages of their requests: 25% to producers of commercial crops (cotton, sugar cane, etc~), or 45,000 ton~ of which 14,700 tons was for sugar; 26,900 tons for cotton; 1300 tons for other crops; 35% to producers of vegetables, or 29,000 tons; 55%, or 25,000 tons to rice growers; and 100% to producers of feed for milk cattle, or 8500 tons. 108,000 tons of guano were sold at a special low price; part of the rest is sold at a higher price in order to accumulate funds which were in part transferred to the Banco Agricola. Growers of vege­tables and small farmers could buy guano at a lower price. (Memoria del Sociedad Naoional Agraria 1949/50, page 19). Peruvian experts state that at ~ onl,y half of the demand for guano can be satisfied, and that the situation will ~

- 20 -

much worse in the future as it becomes more and more necessary to fertilize ~he lands beyond the Costa.

Some imported fertilizer is used in Peru (mainly Chilean nitrates) but imports supply only aome 5000 tons or nitrogen out of an estimated demand of 55,000 tons in 1947. GUano productions for that year had only 22,000 tons nitro­gen content, so that the rest of the demand remained unsatisfied.

Although the guano production is increasing steadily, it will lag more and more behind demand as agriculture develops. It is logical that the Peruvian Government is in favor of the establishment of fertilizer factories. SCIPA es~ timated in 1950 that Peruvian agriculture could use 100,000 tons of ammonium sulphate annually over and above the quantities now being used in the country.

Even if the available quantities of guano were equaJ~y divided over 1,350,000 ha., arable land (which is of course not so), these data come down to 23 kg. or nitrogen, 0.24 of PzDs and 0.08 kg. K~ in 1950/51. Even when we take into consideration that the farmers use some manure these quantities ofnutri­tional elements given to crops are very low.

Lack of fertili~er in Peru is one of the chief limiting factors in agricultural production (except tor sugar and cotton) and output would increase considerably if farmers could buy more imported fertilizer. This would mean more extension and educational work and later broader farm credit racilities.

Marketing and Transport

Marketing and transport are carried on in the traditional, old fashioned way. The cooperative movement is of no importance, although the Government has been interested in it for a long time. Except for cotton and sugar, which are traded along modern commercial methods and channels, most of the agricultural products enter the commercial sphere either via village markets, or via travel­ling merchants who visit the farms with their ,pack animals or with their t~ck, or via merchants living in the villages or little rural towns. In the last t"..ro cases there are often long time, traditiunal liens between a farmer and a mer­chant which are not apt to ~trenghthen the position of the farmer, especially when (as is often the oase), he is in debt to the merohant.

These inefficient marketing methods are fostered by the i80] ",tion of many of the rural areas of Peru, whioh are separated from each other anf from the bigger oenters, either by extensive deserts or by high mountains. In both cases travelling is expensive and time conauming q This isolation often makes it possible for small groups of merchants to bold monopolistio poeitions, and to speculate aooordingly~

Tables IX and X give some idea of the big price differenoes among the many separated markets in Peru. Trade margins can not be calculated from these data beoause they come from different souroes and are therefore not sufficiently comparable. The general impression is that trade margins between the production centers and the final markets are such that even the high transportation costs in this country can easily be met by the traders.

- 21 -

Agrieultural Policies

The agricultural policy of the Government is rather limited, and there is need for a vigorous drive for more food along well defined l1nes 9 Farmers are currently obligated to plant at least 20% of their farms with food crops, but the Government has no policy on the use, distribution or price of agricultural land, nor does it interfere to any marked degree in the marketing of agricul­tural products. Rice is the only commodity still under price control o A minimum price is guaranteed by the Government and is paid by the Oaja de De­positas (a semi-governmental agency) to the farmers.

. An overall Government policy on food production will be spelled out in a plan to develop the production of foodstuffs, according to the Peruvian Minister of Agriculture Luis Dibos Dammert. A t the time this report was edi'lied, this "plan" was still in the formative stage and had not yet been accepted by the Government. Reports are that it will consist of seven points:-

(1) enlargement of the cultivated area; (2) increase of yields per ha.; (3) increase of mechani~ation; (4) import of breeding cattle: (5) construction of storage facilities; (6) provision of more credit facilities; and (7) guarantees for the sale of agricultural products.

In regard to item 4, it should be noted that many breeding oattle (partly with the help of SeIPA and the Banco Agricola) have already been imported. The Government is also investigating the Brazilian development of a cattle in­dustry in the Ama~on area to see if Brazil's methods might be applicable in the Montana.

It is not yet clear how the Government intends to provide more credit facilities and to guarantee the sale of food products.

Much attention should be paid tc the experimental and extension work done in Peru. Tnere are two main experimental stations one in La Holina near Lima, and one in Tingo Maria beyond the Andes. There are also some regional stations. The center in La Molina was established some time ago and is now somewhat in a decline because of the Government's lack of interest. This experimental station is divided into eight departments: agronomy, entomology, phyto-pathology, plant breeding, immunology, horticultUre, chemistry and a department for experiments on the qualities of cereals. The departments ar,e housed in five or six buildings, all of them rather old but still adequate, and large enough for the small staff (27 scientific people for the whole station). Most of the apparatus is old and needs mOQern'ization; an excepi;.ion is the cereals laboratory, which has very modern equipment.

La Molina serves mainly the coastal type of agriculture, whereas Tingo Maria is devoted mainly to experiments for agriculture beyong the Andes.

- 22 -

The Tingo Maria experiment station was established in 1942 under an agreement between the Government of Peru and the Government of the United States, and it still works under this 10-year "14emorandum of Agreement", as a joint under­taking of the two governments. The funotions of the station are (a) agronomic investigations necessary in order to establish a permanent agrioulture in the Tingo Maria area and the Peruvian~Amazon basin in general; (b) extension work among the colonists; (0) propagation of planting materials and their distri­bution to the colonists. The station is very olosely connected with the Col. onization Office.

At the present time the station is under the direction of George A. Woolle~ of aFAR (Office of Foreign Agricultural Relationo)and Ing. E.C. Visscher of the Peru.vian Department of Agriculture. The technioal staff consists of four OFAR officers, two BPI (Bureau of Plant Industry) officers (especially for rubber), and some 17 Peruvian Ingenieros. The station is divided into an agronomy depart~ ment, concerned with soil studies, oultural practioes, inseoticides, economic studies, propagation of seed, etc.; a department of arboriculture, propagation of fruit trees suoh as citrus, coffee, tea, caoao, oil palm and lumber and bamboo trees; a department of pla~t pathology and entomology; a department of animal husbandry, cattle breeding, poultry breeding, veterinary service, feeding trials; a department of chemistry; and an extension and training servioe. The Centro de Colonizacion beoame an integral part of the station in 1950. Moreover, the station runs an electrio power plant, a rice mill, a refrigeration plant and a repair shop f"Jr trucks and machinery.

The results of these experimental activities are supposed to reach the farmers through a system of agricultural schools~ a government extension servioe and some agricultural periodicals. But most of the sma1l farmers are not familiar with the results of the experiments, and they still use backward methods .. As in many other countries, the weak spot in the organization is the dissemina­tion of modern agricultural knowledge among the rank:and file of the rural population. For example there are enough different kinds of periodicals, some especiallj~ devoted to informatiop for small farmers, but the distribution is not well organized.. and the circulation is small (some thousands of copies). However, operators of the big estates frequently do take advantage of the agricultural experiments.

At the top of the educational system, which 1s orga.nized in the Hinis­try of Education, is the well equipped Agricultural College in La Mo~.ina. This is the only institution for agricultural adu9ation in Peru, which is more or less at a university level. The freshmen enter the school at the age of 18, on the average, after they have completed high school. The oollege course takes five years.

This sohool is mainly a training center for officers for the Governmental Services, and tuture managers of large estates.. The sons of medium sized farmers attend the 24 agricultural schools which are scattered over the country.

The extension system in Peru is somewhat complicated and overlapping. There is an already long established government extension service, with looal

- 23 ..

offices in the maip agricultural oenters. Some of these offices are not very active, and they are often too busy wit~ the usual governmental formalities to do mlchactual advisory work. SeIPA also has a more recently established exten­sio~' seIWice (8 years old), whose officers are at "strategic" points, and much more mobile. In addltionthe Banco Agricola provides some advisory services for its custo$ers, and sOme of the private organizations of farmers, such as the . "Sociedad Nacional Agraria ll have their own extension officers, and even expel'''' imental stations (for sugar and cotton). It must be said that there is a great lack of ooordination between these services, and that the Whole field of agri­cult~ral advisory work could function much more efficiently if a working agree ... ment between those services could be carried out •

•

- 24 ...

V. AGRICULTURAL CREDIT IN PERU .' i

There are three types of farmers in Peru:-

(a) The primitive, usually illiterate Indian peasants, located in remote valleys and still living in a nearly moneyless economy. These people are so poor and have so little idea of modern agricultural practices that they are not prospective ·customers for any agricultural or com­mercial bank in the near future.

(1)) The medi\llIr"sized and larger farmers living in the Costa, the Sierra Or the Montana, take part in the money economy of the country and have some idea of modern agricultural methods. These people need more cap­ital than they nov! have available either for a part of the crop year; or for a longer period. They form the large majority of present or prospective customers for agricultural loans. The financial position of these farmers has been improving steadily for the past three years and seems to be particularly strong this year. Nevertheless the me­dium-sized farmers still have a great need for credits. On the other hand, though there are no statistics to underline this statement, the impression is that many of the bigger farmers who apply for lOanS, either from the Banco Agricola or commercial banks, have enough money to finance their farming businesso Apparently they are investing their money in other fields of economic activity, especially trade, in order to earn bigger profits than are usually possible in agricul­ture. In the meanwhile they need cash, so they apply for cheap loans to finance their farms.

(c) The small group of big estates, sometimes organize~ in the form of a joint stock company such as Bildemeister, or Grace, has ea~ access to the existing connnercial banks. They are not, and will not be, customers of a special agricultural credit institution.

This chapter vlill deal with the needs for suitable credit of Group (b).

As iij most other countries in Peru there are three sources of agri~ul­tural credit. The olctest and most prevalent group are the private lenders, such as tradesmen, owners of processing plants (for instance rice mills),rich inhabitants of the village, etc. Secondly~ there are the commercial banks which extend many loans to hactencteras (mainly the larger ones), and thirdly, we find a nearly 20 year old Agricultural Bank (Banco Agricola del f'el~u, ab­breviated as B.A.) which is supposed to cover the whole field of agricultural credit ..

Statistically, nothing is known about the activities of the private money lenders. They usually operate by providing producers with crop loans on the condition that the crop will be sold to them, and eventually be pro­cessed in their mills. Often the s~e people are also sellers of seed, fer­tili~er, tools, etc., so that in Peru as in other countries the farmer even­tually becomes completely dependent on his creditor. In the case of mort­gage loans many farmers have already lost their land, ano. are now tenants of

- 25 -

their creditor. Interest rates and con~issions are very high; the former often rising up to 25% per year and more. The only advantage of this kind of credit for illiterate farmers is that it is extended in a very informal way, by some­body whom they know personally, rod to whom they are known. The commercial banks are by law allowed to make only short term loans, and for thh type of loan they are more important than the B.A.

Amount of Agricultural Loans made by the B.A. as oompared with the Nine Commercial and

Two Savings Ba.'lks . (million Soles)

1947 1948 1949 1950

Commeroial Banks 150.2 189.9 207.7 216 .. 8 B.A. 40.2 4505 47.2 84.5

Tota:! .. 190.4 m:4 EIi:9 301.3 Share of B.A. 22 % 19 % 19 % 28%

The latest available data indicate that the share of the B.A. is in­creasing to one-third of the total amount. In fact the proportional share of the B.A. is larger than these data indicate, because an unknovm part of the loans registered by the Commercial banks as agricul tur al loans are in fact partly used for commercial operations. These banks make our rent account loans which are warranted by agricultural liens, as well as by promissory notes, mort· gages, etc., and they are especially active in the Costa among the cotton pro­duoers. The interest rate of the commercial banks is usuallY between 9 and 12% plus a service fee of 0.5 or 1%. These loans are :m;;r6 expensive than those of the B.A. but dealing with the commercial banks has two advantages for the farm­ers; (a) the commercial banks do not use so many forms, and they make quicker decisions than the B.A., (b) the commercial banks do not look into the way in which they money is used, as the B.A. does.

The B.A. provides the farmers with all kinds of agrioultural loans, al­though most of its business is in crop loans, as will be explained later. The B.A. charges an interest rate of 7%, plus a commission of 10 Soles for loans up to S/lOO, of 1% for loans from S/lOOO up to S/lO,OOO, and of 2% for bigger loans.

In accordance 1111ith the general practice we will distinguish bet\l1reen short term loans (for a year or less), medium term loans (for one to three or four years) and long term loans (for five years or more). About the terms on which private lenders make their loans nothing is known, but it is very prob~ able that they also make only short term loans, though many of them uninten­tionally may not be paid back within a year. Exact data about longer term loans are only available in the case of the B.A. This bank also makes a dis­tinction between smaller loans (up to S/20,000) and bigger loans.

- 26 -

Types of Loans made by the B.A. (millions of Soles)

1947/48 1949/50 Increase Short term loans: Less than 5/20,000 10 23.3 13.3 More than S/20,000 32 69.3 37.3

Total 42 92.0 w.-6

lli1edium term loans: Less than S/20,000 0.4 0.6 0.2 More than 5/20,000 5.1 18.0 12.9

Total 5:5 jF.C 13.1

Long term loans: Less than 5/20,000 More than S/20,000 0.08 4 .. 7 4.6

Total' 0.08 0 1i:O -- --General total 47.6 115.9 68 .. 3

The loans of less than S/20,000 are intended for small farmers, and there are less formalities to perform to get a loan of this type. In actual­ity, big farmers may also apply for these simpler loans, and a small farmer may apply for loans of more than 5/20,000. Because the value of the 501e has decreased considerably during the last few years, many people who were satis­fied with a loan of less than 5/20,000 in 1947 now need twice that amount. For these reasons the data given do not indicate correctly the importance of the B.A. to small farmers, nor how much bus:iness with them has expanded. The number of small loans granted increased from 40730 (total amount 8/12.8 mil­lion) in 1947/48 to 5.825 (total amount S/24 million) in 1949/50. The number of bigger loans, however, increased from 479 (total amount S !38.3 million) in 1947/48 to 881 (total amount S/91.9 million) in 1949/50. These data give the impression ~hat business with larger farmers expands faster than business with emaIl farmers, which is not literally true due to the depreCiation of the Sole as explained above. A more detailed survey of the types of loans made by the B.A. in the bookyear 1949/50 is given in Table XI.

hhen we combine the commercial bank data with the B.A. data, vre get an idea of the total amount of credit extended by all banks to Peruv::.:m agri­culture.

Amount of Recorded Agricultural Credit (in million Soles)

Commercial banks short terms B.A. short term

Total short term B.A. medium term B.A. long term

General total;

1947/48 1)

189.9 42.0

231.9 5.5 0.08

2.37 .. >

1949/50 1)

216.8 92.6

309 .. 4 18.6

4.7 3.32.7

1) Commercial bank data for the calendar years 1948 and 1950, B.A. data for indi~ated book,years, and for loans granted.

- 27 -

Short term credits were 97% of ~otal credits extended in 1941/48, and 94% in1949/S0. Though the importance of medium and long term credits has been increasing in the last few years, their share in the total amount of agri­cultural loans is still very small.

The short term loans, usually called crop loans, are made to enable the farmers to pay the wages for the preparation and tilling of the soil, for tha cultivation and·the harvesting of his crop, tor rentals of land and hired ma­chin~sJ . for the purchase of seed and fertilizer, and even sometimes for the household expenses of the farmer until the crop is sold. Table XI shows for which purposes medium (b) and (c» and long term loans ((d) and (e» are used.

It is worthwhile in a discussion of the types of loans Peruvian farmers need to pay special attention to the cost item "fertUizeru • A much larger part of the short term loan is spent on fertilizer than on the purchase of farm­ing implements. As pointed out in Chapter IV IIguano" is by far the most impor­tant fert~lizer in Peruvian agriculture. Its current production by no means meets the requirements of agriCUlture, nor can output be stepped up rapidly. The only recourse is imported fertilizer and more agricultural credit would not help Peruvian farmers in this respect because they believe that imported ferti­lizer (superphosphate" i.ihUean nitrates, etc.) is too expensive. It is doubt­ful even if they got more credit whether it would lead to a corresponding in­crease of the use of imported fertilizers" 'l'he Peruvian farmers (excluding the sugar estates) do not know enough about the advantages of imported ferti­lizers to help them overcome the price difference.

The balance of the loans made by the B.A. remaining after deducting the crop loans has been used to buy agricultural implemen.ts, breeding cattle and financing of buildings. 'rbe trend towards h~a\~ equipment, such as tractors, threshers and harvesters, has increased the demand for medium and long term loans. This type of loan is especially needed in the Coastal regions where Government and SCIPA pioneering work of the last few years has revealed the possibility of irrigating the land with subsoil water drawn out of the earth by wells operated by motor driven pumps. Since the Costa is completely dependent on a very unreliable supply of irrigation water, such a development is of great interest to the farmers of this region.

~dium and long term loans are also needed for the construction of smal­ler irrigation works and the purchase of expensive breeding cattle. The only institutional source of such loans is the B.A. which cannot rreet the ~emand.

It is obvious that the whole subject of farm credit must be scrutinized carefully and thoroughly, with a view to increasing the availability of medium term loan:;;.

TA'BLE 1 - CIll tivated Area Jer D!martment . (thous. ha.

Commercial Food Total Crops Pastures Crops Ha.. Zi

lTorth: Tumbes 1.2 3.1 4.3 Piura 33.2 23.5 53.7 110 •. 4 7 Lambayeque 13.7 12.0 42.5 68.2 5 Cajamarca 7.0 18 .. 0 176.1 201 •. 1 14 L1b~rtad '27.3 11.0 77.7 116,,0 8 Ancash 6.2 '20.0 91.6 112 .. 8 8

Total 88.6 84.5 446.7 619 •. 8 42 Central: ,

t.imar-Callao 76.7 '12.1 55.3 144 •. 1 10 Huanuco 0.6 1.0 34• 0 35 •. 6 2 Junin 2.3 4.1 96.8 103 •. 2 7 Ruan.cavelica 0.6 2.3 58.9 61 •. 8 4 Ayacu,cho 0.8 3.8 54.7 59, .. 3 4 lea 55.2 . 1.8 15.'2 Z2~Z ...i

Total 136.2 25.1 315.4 476 .. 7 32 Sou.th:

Arequipa ).8 10.0 29.0 42.8 :3 Moquegua. 0.2 5.0 6.7 11 .. 9 -Tacna 1.5 8.0 3.5 13.0 .... Cusco 0.5 4.0 96.3 100.8 7 Apa.;.(imac - 6.0 140 0 38.3 58.3 4 Puno '0 0

~ 0.4 120D5 120·2 ~ Total 12.0 41.4 294.3 347~"! 23

East: - . 0.7 Ji1na~onas 0.2 9.5 10.4 1 San Martin . 0.8 0 .. 3 7.9 9.0 1 Loreto 7.2 0.0 14.1 41.) 1 Madre de Dios .QLl 0.1 0.7 1 1 ...

0.6 ri'!;a "-

'.rotal 2. 0 )2.2 -1 Grand Total 245.8 151.6 lCU8.6 1486 .. ,· 100

Source: The Food Situation in l' eru, SCI!? At Table no. 8.

TA13LE II - Agricultural Production in Peru

Area Production 1948 12!!:2. lli.Q. 1948 ' 1949'

(thous. ha. ) (thous.m.

Wheat 147 •• 146 137 • • Barley 165 ., 186 190

• II l'.1aize 161 •• 166 244 •• Rice (milled) 56 48 33 137 162 Sugar 49 50 51 472 493 Potatoes 177 .', 199 1077 •• Cotton (ginned) 125 147 127 61 67 Q.uinua (

45 • • 35 ( 41 •• Canahua ( 17 (

, •• .,

Camote 40 • It

42 323 " YUCB. 28 . ~ .. 29 277 It'!

Pu1see 26 ,. 53 23 •• J3:road ;Beans •• It. 35 ,. • • PeaS 18 . ,

•• •• •• ." Coffee • • it, 10 •• • • Cacao •• •• 15 "8 · , Garden Products 73 • • •• 1028 •• FrJ;it 117 .. . -. 3728 • • Pastures -ill -W;.. -u- 2014 .a.,t,...,

Suo.,.. to tal 1360 •• 1162 •• '" -, Correction -:1§.!I .....!..!.. 141 ?J -L:!.-.... ~

Total 1438 •• 1503 •• " .

1/ Added broad beans. peas, coffee and cacaO. ~ Added garden products, fruit and pastures.

•• Not Available.

'~

tons)

129 213 251 107 452

1115 70 39 18

336 3~O 38 56 20 5.5 4

•• ~.

,. ., .' , ••

T.AJ3LE III - f}eogra;phic Distribution o'f 'meat Production

1246 1948 i

.Area Yield Production Area. Yield Production (thous. (kg,,~ (thotls~ mo (thous. (kg~ (thous'!> m. he.. ) ba. tons) ha. ) hat . tons)

Ancash 14 719 10.4 15 67~ 9.9

Apurimac 3 989 2.,7 11 687 1.9

.A.Yacucho 6.6 1265 8.3 10 692 6 ... 6

Cajamarca 4.2 630 2.7 10 619 5 .. 1

Cusco 11 842 9.3 24 135 17,,6

Huancaveli oa 7 629 4.4 24 964 23.6

La Libertad 1 840 6.3 1 718 ,5.3

Junin 29 933 21.1 22 1006 21.9

Peru 97 934 90.6 141 928 136.8

Source: Official statistics.

TABLE IV - G,eographic Distribution of Rice Production

1946 1 Producti2.,n 11 ,

Area Yield ~ Production (thous. (kg.? (thous. m. (thous. (thous. m. ba. ) ha. tons) ba.) tons)

Lambayeque 17 3608 61 • .5 21 3152 66.n

La Libertad 15 4437 6.5.1 17 4540 76.8

plura 9 36.50 32.6 1 3.579 25 • .5

Peru .51 37.52 192.1 .56 3688 2060 9

11 Hulled rice.

Source: Offioial statistics.

TABLE V - Geogre1)hic Distribution of Cotton Production

1946 1948 Production y ~ Yield Production (ra'!',) (thous. m. (thoua. (ra''') (thous .. m. tons) hall) (kg .. /ha. ) tons)

lca 33 47 1413 65.7

Lima and Da.llac 35 57 1365 77.3

Piura 11 18 1090 20.1

Peru 71 125 1327 16.5.4

11 Ginned ..

Source; Official statistics.

TA"BLE VI - Geographic Distribution of S¥ar Proc1_uction

1946 1947 Production .A:rea. Yield ner Ea • Production (thous. m. ( thous. Cane Sugar (thous. m. tons) Ita. ) (m. tons)(m. tons) tons)

Lambayeque 115.8 17 112 19 :30

Chicallla Y Santa Ca.talina 215.5 26 143 7.6 230

Peru 379.2 50 127 15 412

Source: 0fficial Statistics.

TABLE VII - Food Oo'nl}!Wtion per, capi ttl in k. per Year

Cereals: '«"heat Barley Oats Ha1ze Rice (rough) Q,uinua.

Total Roots and Tubers:

Potatoes S\'leet potatoes Cassava Other

Sugar Pulses Vegetables Fruits Meat:

Total

lleef Hutton/Lamb Pork Goat Poultry Offal

Total

Fish, all kinds Eggs i'alk and Oheese:

Oows milk If evaporated

Goats milk Oheese

Total C11s and Fats:

Butter Oottonseed oil Lard Tallow Other

Total Ohocolate

Grand Total

FAD 1215{39

27.3 12.2 0.2

41 .. 4 11,3 ..5.& 98.2

5407 19 .. 7 1405 20 ... 0

108.9 13.6 15.6 13~6 4204

8.8 5.8 6.2 0.8 1.0

...b!! 24,0

0.9 3.2

22.4 0.7 3.5 1.1

27.7

0 .. 3 1.9 1.4 0.3 0.1 4.0 0,3

352.4

SOIPA

12!t.1

24 (flour) 8

•• 40 14 ~ 92

67 ( 29 (

(

u. 96 19 15 24 39

24 (incl, fish)

( 27 (

2 (incl, - butter)

'4

29.2 10.6 0,,4

41 .. 9 15.0

1:).5 102.6

69.9 22.6 7 .. 7

22.0 122 .. 2

22.4 6.9

14.0 42.6

8.2 6.3 5.1 0,,8 0.9 1 .. 1'

22.6

1.3 3.3

20.1 1.7 3.3 1.0

26,,1

0.4 1.9 1.2 0.3 0.1 3.9

10 (coffee & 0,2 - misc.) 355 368.1

TA13LE VIII - National Account for the Aericultural Sector of Peru

Income EX12.enses ~ 1'147 12!!:2 ~ ~ l2!t2

A. I n Mil 1 1 0 n Sol e B

products sold plus increase Raw materials bought 468 736 1272 in stocks 1700 27J4 5484 Salaries paid 65 95 115

Wages paid ' 337 509 821 Earnings of family mombers 508 900 2407 Depreciation 85 54 89 Investments 30 62 221 Taxes (on profit and direct) 68 151 182 Taxes (indirect and statistioa1

discrepancy) 38 50 103 Interest 9 11 15 ProfIt -9-Z ~ 252

Total 1700 2704 5484 Total 1'700 2704 5484

E, Amounts for 1945 put at 100

Products sold plus increase Raw IlIa,terials bought 100 1.57 272 in stocks 100 159 323 Salaries paid 100 146 177

Wages paid 100 151 243 Earnings of family members 100 177 474 Depreciation 100 62 10.5 Investments 100 207 737 Taxes «)n profit B,nd direct) 100 I""'! ........ "\ 266 Lt.. ... ;1f

Taxes (indirect and statistical discrepancy) 100 1)2 271

Interest 100 122 167 .. :f4fi ~ - Profit 1QQ.

Total 10) 159 J2) Total 10c) 159 32)

(continued on following page)

.... 2-TABLE VIII cont t d. -

I n 0 0 Tn e E x pen s e s

1945 1947 1942 12!±J. ~ l2!!:2

c. In_Pereent~ees QfTotals

Products sold plus increase Raw materials bought 27.5 27.3 23.2 in stocks 100 100 100 Salaries paid 3.8 3·, 2.1

Wages paid 19.8 18.8 15.0 Earnings of family members 29.9 33.3 43.9 Deprecia tion ,.0 2.0 1.6 Investments 1.8 2.3 4,,0 Taxes (on profit and direct) 4.0 5.6 3.3 Taxes (indirect and statistical

discrepancy) 2,,2 1 .. 9 1.9 Interest 00 5 0.4 0.3

- Profit 5:4 5·0 4·Z Tota.l 100 100 100 Total 100.0 100.0 100 .. 0

TABLE IX- Wholesale Prices in Soles for 1950 -(in kg:)

north Central_ South ~kid Products £h1clayo Piura Trpjillo ~ Ruanca:yo 1E!! :dreguipa Cusco 19uitos

')I;'11i t e sugar 0 .. 8.5 0.93 0.73 0.90 0.92 1,,00 1.1.5 1.48 2.18

Rice 1.40 1.6) 1,,35 2 .. 20 1 .. 54 1.43 1.40 2 .. 67 1.92

I.feat 4.30 4.38 .5.14 5050 4.19 4.00 3.10 2.53 2.82

Cows t milk(lt.) 1.16 1.02 0.90 1.80 1.23 1.20 0.60 0.74 1.40

Sweet potatoes 0.37 0.46 0.25 0.64 0.63 0.32 0.40 0.64

White potatoes 1.20 1.22 1.03 1.15 0.75 1 .. 12 0,,80 0.66

Cassava 0.48 0.54 0.30 0.90 0.79 0.73 0.75 0",60 0 .. 34

Corn 1.63 1.05 10 81 3.00 1 .. 50 1.25 0.98 0.83 0.70

Beans 2.13 1.49 2.59 2.40 2.32 2.44 2.00 1.81

Wheat Flour 2.75

Bananas 0.69 0.88 0,.25 0.75 0.66 00 21 1,,50 0,,60 0.43

Oranges 0.70 0.48 0.64 0.40 0.80 0.16 2.00 0.60 0.33

Source: Questionnaire of SCIPA to Provincial Councils.

TABLE X- Average Retail Prices J~~uarlLSeptember 1250 (in' kg. ) - - - .

N;orth Central South Ori~nt Products Chiclayo P1ura Tru,1ill0 Lima Huane:aYo lca Arequipa Cusco Iquitos

'Whi t e sugar 0.90 1.07 0.90 0.90 1.00 1.108. 1.33 1.44 2.29

Rice 1.20 1.20 1.20 1.20 1.38 1.32 1.77 2.30 2.37

:Meat 4.55 5.63 5.00 5.7(') 4 .. 33 4.08 4.47 2,,45 6.33

Cows 1 milk(lt.) 1.13 1.30 1.07 1.70 1.30 1.20 0.80 0.60 2.31

Sweet potatoes

Potatoes

Cassava

:Beans·

Wheat flour

Corn

:Bananas (c/u)

Oranges (c/u)

0.37 0.46 0.30 A.48 0.65 0.45 0.l}2 0.80 4.70

1.60 1.36 1.60 1.31 1.03 1.20 0.78 0.63 3.47

0.1.J.8 0.50 0.41 0.77 0.50 1.08 0.92 0.83 0.85

2.34 2.19 2.04 2.73 2.00 2.68 2.13 2 .. 00 3.50

2.00 2.47 1.7) 1.80 2.00 2.10 2.13 2.05 2.78

2.27 1.19 1.82 2.26 1.90 1.75 2,,13 1.13 2.33

0.18 0.16 0.10 0.13 0.15 0.20 0.28 0.13 0.15

0.23 0.18 0.10 0.42 0.30 0 • .50 0.25 0.15 0.43

The price of rice in October 1940 increased from S/1.20 to S/2.20. The price of sugar in October 1950 increased iron S/0.90 to Si1.10.

Source: Direccion Nacional de Estadistica., Ministerio d.e Hacienda y Cameraio.

TABLE XI - Details on TYRes of Loans made by; the 13 .. A. !!L1949/50

(million of Sales)

(a) 1 year loans for -cotton prnduction rice miscellaneous

Total

(b) 3 year loans for -trucks tractors miscellaneous

Total

(c) 3 - 5 year loa,'lS for -meat herds dairy herds sheep hogs poultry alpacas

Total

Total (b) and (c)

(d) 5 - 8 year loans for -buildings irrigation '\lorks miscellaneous

Total

(e) Longer term loans

Total (d) and (c)

General Total

Hare than SL20,OOO

36.5 18 .. 4 14.3 69.2

1.1 3.1 1.8 60 0

2.1 7.6 1,,4 0.4 0 .. 3 0.004

11.8

17.8

1.14 0.78 M:i 2.35

2.32

4.7

91.9 115.9

Less than S/2o,noo

0."'1 0.02 0,,02 0,,05

0.12 0.43 0.01 00 01 0.('\02

0.57

0.6

24.0

Details about the Land Tenure Situations

The USDA. i-eport on Ext ens ion Experiences Around the 'vorld, May 16- 20,1949. gives the following informatien:-

ttNost of the good land of the sierra region of Peru is held in large farms (fundos or haciendas) datinG back to colonial times. These large farms are operated mainly by farm workers (yanaconas or peones) most of \'lhom are Indian or mestizo. These farm ,.!orkers are considered to be an integral part of the farm unitt people and land beine transfer­red as one. This is because each farm worker has a small parcel of land for t'1h10h he pays in ;'fOrk on the farm. At present, \·Jhen a farm is to 'be bought the buyer asks hO\" many ,,:orkers it has on it. On the basis of the number of men., the number of "1Orkdays ths,t each OHeSt ,,,,,hat they are able to produce annually, and the amount of livestock they possess, he determines the price he 'vill offer.

~There are distinct regional differences in hacienda agriculture. In the coastal zone haCienda farming, thallics to large scale irriGation, is relat~vely efficient, although it still has a lone way to go in mech­anization. Farm labor is freer and management is more careful. Gover~ ment policy is aimed at helping agriculture on the coast, and a patronizing attitude to,,,ard labor is more pronounced. Uncloubtedly the starrlal-d of living for the average laborer is higher on the coast than in the sierra. Finally, the haciendas on the coast produce crops such as cotton, sugar cane. and flax, for a '\"orld market, and farming is highly commercial. In the sierra region the tenants or sharecroppers are left pretty much to their own devices in the ~peration of the hacienda as long as they tttrn over the required share of the crop at the end of the harvest year.. They have their O\'1!l little plot of ground from which they subsist, and market what little surplus they :have in the nearest town. Farm mechanization is slightly more advanced than on the community lands of the Indians. The problems of the sierra region are absentee landlords, lack of cred.it, p()or communication and transpnrtation facilities, and large holdings ~f land.

"The most common rental system in Peru is that flf payment in labor performed on the plantation. In one system the hacendado (large farm op­eratoI') requires that the laborer \vork an indefinite number of days on the hacienda in eXChange for the land he is allo\'led to use fur himself. Often such rental includes the obligation nf carting the products tn market. It may even include work as a servant f~r the hacendado, in his tOi·.'1l hOuse as well as on the farm.

"A second type of rental is ",orking a specified number of days for the hacendado. The third operates as follows: A piece of land is taken by a tenant whose rental is agreed upon as 20 soles. l~t a daily wage of 20 centavos, the tenant can 'dork off his rental by eiving 100 days. '.'lork to the hacendado. The fourth kind of rental is sbple share­cropping. The tenant supplies eVerything exce]}t the land ano. then turns over half the crnp. Other systems exist tbro~~hout the country but are generally modifications of the ones described here,"

~ =

Muon •• Ch.ch.poy .. ~ ......... SU.401 HUll, •• Apuffln.C. 109,nl Ab ..... y = Aroq.ipo ,.. .... Mquip. .d1 Ay ..... ho 44.21ft Ayaeucho

@ eai''''''" 621.115 C.jamaru eo ... "2(1,1 SO CutcO HVtlftclIV.Uc.a nuts Huam::.vefica: Hl,laPluco 101.0'1& Huanuc:o lea 140.11) Ie. JUl'ltn .to,915 Hua.w:ayo t.. tib .... d «6.1$1 Ttuptro 11mboyoq •• %21."19 Chi.Loy .. Lima '41,&22 Lim. l .... t. 1>IO.m Iqult •• M.d,. d. Dios 25,,.5 1'1 •• Maldonad. Moqutg •• i'.IIO Moquigua

~ PISCO 1%7,1,. Cerro de Pasc:o Piutl 471.174 Pi"". ~~ "''''' 107,'" Puno Son Martin 1)1,703 Moyobambo

~~ T .... 41,tt7 Tacna Tum ... H,O'" TUMba.

1.

2.

4. 5.

6.

8. 9.

10. "II.

12.

13.

14.

15.

16. 17.

18.

19.

20.

21.

22. 23.

BIBUOGRAPHY ,

Latin America~ by PGE~ James, Odyssey Press, 1942, Second Edition, 1950.,

Economic Development in Latin hffierica, by Simon G~ Hanson, Inter­American Affairs Press, 1951~

Economic Survey of Latin America, United Nations Economic Commission for Latin America, 1948. ..

FAO Yearbook of Food and Agricultural Statistics, 1949 Ie Handbook on the Third Inter-American Conference on Agriculture) 1945,

Vol. I, Part 1. Anuario Estadistico del Peru, 1947, Ministerio de Hauenda y Commercio,

Lima, 1949. Peru, Economic and Commercial Conditions, Board of Trade, HMSO, Lon-

don, 1949. The Peruvian Economy, Pan American Union, 1950. New Economic Horizons for Peru, Pan American Union, 19450 Fats and Oils in Latin America, Pan American Union, 1947. Agricultural Progress in Peru, Institute for Inter-American Affairs,

Washington, June 1950. The Food Situation in Peru, Servioio Cooperativo Inter-Amerioana de

Produccion de Alimentos, Lima, 1943. Agriculture i"cross the Andes, in "Agriculture in the Americas," OFAR,

Washington, January 1944. La Renta Nacional del Peru 1942/1947, Banco Central de Reserve, Li.,.l1a,

1949 .. Conference Report on Extension Experiences around the World, USDA,

Washington, D&C., 1949. Food Balance Sheets, FAO, Washington, D.C., April 1949. The Economic Role of Peruvian Cotton, 1916/48, Pan American Union,

Noo 182, September 1948. The Milling and Baking Industries of Peru, Institute for Inter-~l1erican

Affairs, vv"ashington, 1946. Animal Disease Control Investigations in Peru, Institute for Inter­

American Affairs, Washington, 19470 Peruvian Yearbook 1948, edited by Peruvian Times and Andean Review,

Lima. Proceedings of the Inter-American Conference on Conservation of Re­

newable Natural Resources, Denver, Colorado, September 1948. Peruvian Guano" by E.P. Toppy, in Foreign Agriculture, 191 .30 Twelve Articles on "SCIPA" in Peruvian Times and Andean HevieVlT, Sep­

tember/December 19500