agritech in peru amazonaws com
Exporter Guide
AGRITECH IN PERU Market Profile November 2011
This document is one of a series of free information tools for exporters produced by New Zealand Trade and Enterprise. New Zealand Trade and Enterprise provides a wide range of standard services and sophisticated solutions that assist businesses through every stage of the export process. For information or advice, phone New Zealand Trade and Enterprise on 0800 555 888, visit www.nzte.govt.nz, or contact your New Zealand Trade and Enterprise client manager.
CONTENTS 1
2
3
2/
MARKET STRUCTURE 1.1 Market Overview
3 3
1.2
Market Drivers
4
1.3
Market Potential
5
1.4
Key Players in the Market
5
1.5
Regulatory
5
1.6
Sustainability
6
MARKET ENTRY AND DEVELOPMENT 2.1 Market Entry Strategies
7 7
2.2
Points of Differentiation
7
2.3
Long Term Strategic Issues for Exporters to Consider
9
2.4
Distribution Channels
9
MARKET RESOURCES AND CONTACTS
Exporter Guide | Peru | Agritech Market | November 2011
10
1 MARKET STRUCTURE Peru is the third largest country in South America with population of 29.25 million. The Peruvian economy experienced a contraction in 2009, during the financial crisis however in recent years, the economy demonstrated a sustainable and fast growth rate. The recovery was quick due to the low inflation rate (2.8 percent in 2010), business confidence and private investment growth of an average of 15 percent during the last 5 years.i Peru has a strong network of free trade agreements allowing approximately 85 percent of their exports to have duty free access. The New Zealand government is currently in negotiation with Peru on Trans-Pacific Partnership Strategic Economic Partnership Agreement.ii
1.1 Market Overview Peru is New Zealand’s third largest export destination in Latin America. In 2010, New Zealand’s export to Peru totalled US$57.02 million. New Zealand’s agritech exports to Peru totalled US$1.77 million in 2010, an increase of 180 percent from 2006 (US$0.63 million).iii 1.1.1 Dairy Milk production grew steadily, displaying a CAGR of 3.7 percent during the period between 1989 and 2009. Cow milk production reached 1.65 million tonnes in 2009 due to an increase in livestock population, positive farm earnings and better communication between processors and producers.iv The excess domestic supply of milk led exports of evaporated milk to increase primarily to Haiti, Trinidad & Tobago and Venezuela.v The regions that enjoyed the biggest milk production in 2009 were Arequipa (accounting for 22 percent), Cajamarca (18 percent), Lima (17 percent), La Libertad (6 percent) and Amazonas (5 percent). vi In Arequipa and Cajamarca, dairy farming is based on small farms rearing cattle on pasture whereas, the land in Lima need irrigation forcing farms to purchase feed. Despite growth of large and more efficient farms, dairy production is still underdeveloped in Peru. In 2005, approximately 80 percent of the farms had less than 20 cattles and a good portion of the 80 percent had less than 5 cattles. In Andean highlands, most farms are privately owned with less than 5 hectares in size. The land needs intensive management and irrigation. Coastal region can produce year round lucerne-based milk and the production in the region accounts for approximately 60 percent of Peru’s total milk production. Most farms are smaller in size with less than 3 hectares of land. Amazonian Peru has lack of livestock production system due to limited transport infrastructure.v
3/
Exporter Guide | Peru | Agritech Market | November 2011
In 2009 Peru had an estimate of 886,000 cows and this number is expected to increase to 1.2 million by 2015. 1.1.2 Beef In 2009, Peru had 5.1 million head of cattle, of which 73 percent are located in Andes highlands region. The beef cattle are more heterogeneous than the dairy stock and include Hereford, a number of continental breeds, Holstein male calves and steers and numerous crossbreds.vii 1.1.3 Sheep Peru’s sheep population totals 14.3 million heads of which 6.2 million are located in southern highlands in Puno and Cuzco. Criollo Peru’s sheep meat has low productivity level due to its poor genetics. Sixty percent of the livestock is represented by Criollo, 25 percent by mixed breed and 15 percent by other breeds.v In 2010 total production of sheep meat and wool were 34,000 tons (an increase of 1.2 percent from 2009) and 10,200 tons, (a decrease of 0.4 percent) respectively.viii Over 40 percent of the wool production is located in the region of Puno.
1.2 Market Drivers The agritech sector has demonstrated steady growth, averaging at 3.4 percent during the 10 year period 2000-2010. As the Peruvian government continues to stimulate the economy through Free trade agreements, agricultural export activities have demonstrated a strong growth rate of 20 percent during the last 5 years and are estimated to grow considerably to populous countries such as China, Korea Japan and India.ix Production as well as demand for meat has grown. Poultry production more than doubled since 1998 and chicken remains a major staple food in Peru. The Dairy market enjoyed growth especially in Cajamarca, located in north of Peru. A forestry development board, Fondo de Crédito para el Desarrollo Forestal (FONCREAGO) introduced programmes to improve production by decreasing the use of synthetic fertilisers, providing veterinary services and improving pasture management.x Production of agriculture products in thousand tonnes
4/
2008
2009
2010f
2011f
Pork Production
115.2
114.2
118
121.3
Beef & Veal Production
163.3
166.8
170.6
173.1
Milk Production
1,597.60
1,670.00
1,718.20
1,844.80
Exporter Guide | Peru | Agritech Market | November 2011
Poultry Production
877.20
937.60
975.00
1,020.20
Source: Business Monitor International (NB: 2010, 2011 forecasts)
1.3 Market Potentialxi The growth of the economy has increased consumer consumption, trade and quality of life. There are opportunities for high tech machinery, seeds for agriculture and products for livestock (such as hormones and vaccines). Agriculture is a sector that New Zealand is known for its expertise, with opportunities for New Zealand companies to provide consultancy services and training.
1.4 Key Players in the Market xii A key player in the dairy industry is Leche Gloria, the largest dairy products manufacturer. Gloria collects over a thousand metric tons of milk everyday and provides artificial insemination products, milking equipment, tanks, cold lines and pasteurizers. Gloria is based in Arequipa. Nestle is another prominent player in Peru which invested over US$12 million in factories and a plant in Lima and Cajamarca.
1.5 Regulatory Information provided in this section is for reference only. When negotiating supply contracts and before beginning actual export, companies are advised to consult closely with their importer or distributor. Duties and tariffsxiii Custom duties on imported goods are imposed on an ad-valorem basis at rates of 0 percent, 9 percent, 17 percent and 20 percent. The majority of agribusiness goods entering Peru arrive duty free, however the payment of Goods and services tax (IVA) on freight and insurance is still applied in most cases. IVA is applied to the CIF value of import goods, plus corresponding duties, at a rate of 18 percent. All goods imported into Peru must be cleared through Peruvian Customs and it is useful to consult the services of a customs broker or freight forwarder. The regulatory environment for agriculture sector has been eased in the last years: • Income tax was reduced to 15% • Early recovery of Value Added Tax in the pre-operational stage • Depreciation of water and irrigation expenditures at a rate of 20% annually. • Businesses located at 2,500 meters above sea level are tax exempted.
5/
Exporter Guide | Peru | Agritech Market | November 2011
These tax benefits apply until December 2021.xiv For more information see Centralized governmental online service to process international trade, www.vuce.gob.pe Licensing and registration requirements The products that require certification prior to import from the Peruvian Agrarian Health Service (Servicio Nacional de Sanidad Agraria or SENASA within the Ministry of Agriculture, www.senasa.gob.pe) include: • Plant products and any products that might present a danger to plants • Animals • Fertilizers and pesticides • Veterinary products and animal feed Products such as foods, beverages, toys, solid residuals, chemical goods require certification or registration prior to import from the General Direction of Environmental Health (www.digesa.minsa.gob.pe). The products that require certification prior to import from the General Direction of Drugs, Raw Materials (www.digemid.minsa.gob.pe) include pharmaceutical products, diet products, sweeteners and medical products. Imports to Peru of new agricultural machinery are not regulated and therefore does not require any special certification prior to shipment. However, imports of used agricultural machinery would need to comply with certain regulation.
1.6 Sustainabilityxv Since the foundation of the Ministry of the Environment (MINAM) in 2008, there has been a process of institutional strengthening regarding environmental issues in the Country. In Peru, the National Environmental Policy (NEP) is in accordance with the General Environmental Law. The NEP is a compulsory instrument which gives orientation to public and private activities. Its main areas are: biological diversity, forests, climate change, solid residues, sanitization, chemical substances and others. It highlights the preservation of the Amazon with Sustainable Development. Currently national, sectorial, regional and local authorities are promoting, by tax incentives, the development of investment projects with clean production technologies. Dairy farmers are projected to be affected by this regulation in the future, however currently there is not a high level of awareness.
6/
Exporter Guide | Peru | Agritech Market | November 2011
2 MARKET ENTRY AND DEVELOPMENT 2.1 Market Entry Strategies New Zealand pastoral farming products are not well known in the market. The promotion strategy of the New Zealand pastoral-farming model (to increase agricultural productivity by improving pasture, animal and farm management) should focus on stand-alone elements that can be applied to the way Peruvian farmers operate today. The key to good market presence is finding the right distributor who can sell and distribute your product into the relevant areas. Given that most distributors in Peru seek exclusivity, we recommend that you spend time searching for the right distributor for your company’s products. If you choose to go with an importer/agent who will sell onto rural distribution channels, check that the extra margin they charge does not result in an uncompetitive final customer price. An agreement for marketing and promotion costs must be clearly established with agent / importer. Be aware that rural supply chains do little to promote your product and that they will rely on you and / or your importer / agent to do this for them. Options for promoting your product include advertising and PR in rural media and farming magazines, promotion at field days, technical presentations and participation in exhibitions, personal sales calls and direct marketing. Peru’s pastoral based farmers do not trust on new products or new ideas, they need to see results. It is recommended to seek assistance from a reputable scientific company that conducts research, seminars on genetics and pasture farming in high altitudes. Relationship marketing should still be a central part of any entry strategy. Marketing support on technical and financial matters should be considered.
2.2 Points of Differentiation There are three New Zealand technologies that may have a unique and sustainable competitive position in Peru. •
7/
Forage Seeds: New Zealand seeds up to 2009 have good reputation in the market, they can be used for various purposes, yield high productivity, etc. However there are rumours about problems with National Agrarian Health Service within Ministry of Agriculture in Peru (SENASA), therefore imports have dropped recently.
Exporter Guide | Peru | Agritech Market | November 2011
•
Electric Fencing Equipment: According to distributors, New Zealand electric fence energizers are very reliable and adapt very well to the power requirements of the Peruvian conditions. The fences have a strong reputation as top market players.
•
Animal Genetics: New Zealand genetics are tailored to the pasture-based model and produce small animals with very efficient pasture to milk conversion rates. For producers that follow the New Zealand model or want to decrease the size of their cows, New Zealand genetics are very well positioned, although still market share is very small. The following table outlines areas of opportunity for New Zealand agritech business in the Peruvian market. Technology Area
Product Category
Product
Opportunities
Threats
Genetics
BOVINE SEMEN
Bovine semen
Strong support of leader’s opinion to the use of pasture based system
Payments for milk mainly based on production level (not in solids).
Increasing use of pasture based system in Puno.
Low price of national seeds and strong competition from the USA.
Irrigator (effluent spreaders)
High price of fertilizers. Current rules for effluent management.
Similar Australian technology. Infrastructure changes necessary to use irrigators.
Electric fence
Prestige of NZ technology. Market potential.
Lower cost of suppliers from domestic and other countries
–
Important Labs dominate the market. High cost and long inscription procedure. Competition from other trademarks.
FORAGE SEEDS
White clover Rye grass
Pasture Management EFFLUENT MANAGEMENT
ELECTRIC FENCE
Vaccines ANIMAL HEALTH PRODUCTS Hormones
Animal Management Systems
Milking Machinery
8/
CALF FEEDERS
Calf feeders
Market potential. Increasing use of pasture based system in Puno and Arequipa
EID
Readers, Ear-tags
Traceability requirements.
High cost.
WEIGH-SCALES
Weigh-scales
Good relation quality price
Competition from other brands.
MILK TANKS
Milk tanks
Good relation quality price
Competition from leaders in the
Exporter Guide | Peru | Agritech Market | November 2011
Technology Area
Product Category
Product
Opportunities
Threats market. Inexistence of post-sale technical support.
MILKING EQUIPMENT
Milking equipment
Good relation quality price
Competition from leaders in the market. Inexistence of post-sale technical support.
2.3 Long Term Strategic Issues for Exporters to Considerxvi The 2007-15 Strategic Plan to Develop Livestock in Lima promotes better technology to manage cattle and to improve genetics. New Zealand companies could play a key role in the implementation of the plan (i.e. electric fences, and light livestock equipment, etc).
2.4 Distribution Channels The most common channels used by New Zealand agritech companies that export to Peru are: a) directly to a Peruvian distributor / retail channel. b) through a New Zealand consolidator (i.e. Pacific Basin Exports Ltd; www.pbex.co.nz) There are a few companies in Peru that act as an importer / agent working as an intermediary between the manufacturer and the rural supply store. However, due to the small size and competitiveness of the market in Peru, the stores also tend to be the distributor / dealer for the country in most cases. Agricultural supply stores in Peru will handle a wide range of merchandise that is tailored to the productive sector in the city / region where the stores are located. Most companies request exclusive distribution rights from their suppliers when they bring in new technology from abroad and often prefer to deal directly with the manufacturer. If they do not get exclusivity distribution rights will request financial support to cover marketing start up expenses. Animal health products are usually imported by specialist veterinary companies (local manufacturers of veterinary products) and are sold into distribution / dealer channels. This is largely due to their specialist knowledge and experience with the regulatory approvals required and the support they can offer to the distribution channels with their teams of veterinary / sales support staff.
9/
Exporter Guide | Peru | Agritech Market | November 2011
Farming services such as research, consultancy and in-bound agricultural tours could be promoted through rural stores and there are some organisations which are interested in this concept. Appropriate industry associations, representative groups and government agencies could also be an outlet for these services.
3 MARKET RESOURCES AND CONTACTS ASSOCIATIONS ORGANISATION
WEBLINK
Ministry of Agriculture - Peruvian Agrarian Health Service
www.senasa.gob.pe/
Perulactea, a business network – dairy sector
www.perulactea.com/
Ministry of Health
www.digemid.minsa.gob.pe/
Promotion Commission Peru Export and Tourism
www.promperu.gob.pe/
Foreign Trade Society of Peru
www.comexperu.org.pe/
Peruvian Institute of Asparagus and Vegetables
www.ipeh.org/index.asp
TRADE EVENTS
WEBLINK
Expo Alimentaria, Lima
www.expoalimentariaperu.com
Livestock Fair of FONGAL Cajamarca
www.fongalcajamarca.com.pe/
Calendar of all the trade events within the sector
www.minag.gob.pe
OTHER NZTE PUBLICATIONS REPORT
WEBLINK
Peru Country Brief
www.nzte.govt.nz
Disclaimer: This publication is provided to you as a free service and is intended to flag to you market opportunities and possibilities. Use of and reliance on the information/products/technology/concepts discussed in this publication, and the suitability of these for your business is entirely at your own risk. You are advised to carry out your own independent assessment of this opportunity. The information in this publication is general; it was prepared by New Zealand Trade and Enterprise (NZTE) from publicly available and/or subscription database sources. NZTE; its officers, employees and agents accept no liability for any errors or omissions or any opinion/s expressed, and no responsibility is accepted with respect to the standing of any firm/s, company/ies or individual/s mentioned. New Zealand Trade and Enterprise is not responsible for any adverse consequences arising out of such use. You release New Zealand Trade and Enterprise from all claims arising from this
10/
Exporter Guide | Peru | Agritech Market | November 2011
publication. New Zealand Trade and Enterprise reserves the right to reuse any general market information contained in its reports.
i ii iii iv v vi vii viii ix x xi xii xiii xiv xv xvi
11/
Central Intelligence Agency retrieved from https://www.cia.gov/ New Zealand Ministry of Foreign Affairs & Trade (2010) retrieved from www.mfat.govt.nz Global Trade Atlas. November 2011 retrieved from http://www.gtis.com Business Monitor International, October 2011. Peru Agribusiness Report A4 2011. PWC, November 2011. Global Agribusiness Project: Background Analysis Mindpower Solutions, June 2011, Peru Milk and Dairy Products Market Outlook to 2015. Source: Agrobanco, www.agrobanco.com.pe Peru Ministry of Agriculture. 2010. Retrieved from www.minag.gob.pe COMEXPERU, July 2011. Market Analysis of Opportunities for New Zealand Business in Peru Business Monitor International, October 2011. Peru Agribusiness Report A4 2011. COMEXPERU, July 2011, Market Analysis of Opportunities for New Zealand Business in Peru Mindpower Solutions, June 2011, Peru Milk and Dairy Products Market Outlook to 2015. Ministry of Commerce VUCE 2010. Retrieved from www.vuce.gob.pe COMEXPERU, July 2011, Market Analysis of Opportunities for New Zealand Business in Peru PWC, 2010, Doing Deals in Peru Regional Directorate of Agriculture in Lima, published March 2007, Strategic Plan to Develop Livestock in Lima.
Exporter Guide | Peru | Agritech Market | November 2011
AGRITECH IN PERU Market Profile November 2011
This document is one of a series of free information tools for exporters produced by New Zealand Trade and Enterprise. New Zealand Trade and Enterprise provides a wide range of standard services and sophisticated solutions that assist businesses through every stage of the export process. For information or advice, phone New Zealand Trade and Enterprise on 0800 555 888, visit www.nzte.govt.nz, or contact your New Zealand Trade and Enterprise client manager.
CONTENTS 1
2
3
2/
MARKET STRUCTURE 1.1 Market Overview
3 3
1.2
Market Drivers
4
1.3
Market Potential
5
1.4
Key Players in the Market
5
1.5
Regulatory
5
1.6
Sustainability
6
MARKET ENTRY AND DEVELOPMENT 2.1 Market Entry Strategies
7 7
2.2
Points of Differentiation
7
2.3
Long Term Strategic Issues for Exporters to Consider
9
2.4
Distribution Channels
9
MARKET RESOURCES AND CONTACTS
Exporter Guide | Peru | Agritech Market | November 2011
10
1 MARKET STRUCTURE Peru is the third largest country in South America with population of 29.25 million. The Peruvian economy experienced a contraction in 2009, during the financial crisis however in recent years, the economy demonstrated a sustainable and fast growth rate. The recovery was quick due to the low inflation rate (2.8 percent in 2010), business confidence and private investment growth of an average of 15 percent during the last 5 years.i Peru has a strong network of free trade agreements allowing approximately 85 percent of their exports to have duty free access. The New Zealand government is currently in negotiation with Peru on Trans-Pacific Partnership Strategic Economic Partnership Agreement.ii
1.1 Market Overview Peru is New Zealand’s third largest export destination in Latin America. In 2010, New Zealand’s export to Peru totalled US$57.02 million. New Zealand’s agritech exports to Peru totalled US$1.77 million in 2010, an increase of 180 percent from 2006 (US$0.63 million).iii 1.1.1 Dairy Milk production grew steadily, displaying a CAGR of 3.7 percent during the period between 1989 and 2009. Cow milk production reached 1.65 million tonnes in 2009 due to an increase in livestock population, positive farm earnings and better communication between processors and producers.iv The excess domestic supply of milk led exports of evaporated milk to increase primarily to Haiti, Trinidad & Tobago and Venezuela.v The regions that enjoyed the biggest milk production in 2009 were Arequipa (accounting for 22 percent), Cajamarca (18 percent), Lima (17 percent), La Libertad (6 percent) and Amazonas (5 percent). vi In Arequipa and Cajamarca, dairy farming is based on small farms rearing cattle on pasture whereas, the land in Lima need irrigation forcing farms to purchase feed. Despite growth of large and more efficient farms, dairy production is still underdeveloped in Peru. In 2005, approximately 80 percent of the farms had less than 20 cattles and a good portion of the 80 percent had less than 5 cattles. In Andean highlands, most farms are privately owned with less than 5 hectares in size. The land needs intensive management and irrigation. Coastal region can produce year round lucerne-based milk and the production in the region accounts for approximately 60 percent of Peru’s total milk production. Most farms are smaller in size with less than 3 hectares of land. Amazonian Peru has lack of livestock production system due to limited transport infrastructure.v
3/
Exporter Guide | Peru | Agritech Market | November 2011
In 2009 Peru had an estimate of 886,000 cows and this number is expected to increase to 1.2 million by 2015. 1.1.2 Beef In 2009, Peru had 5.1 million head of cattle, of which 73 percent are located in Andes highlands region. The beef cattle are more heterogeneous than the dairy stock and include Hereford, a number of continental breeds, Holstein male calves and steers and numerous crossbreds.vii 1.1.3 Sheep Peru’s sheep population totals 14.3 million heads of which 6.2 million are located in southern highlands in Puno and Cuzco. Criollo Peru’s sheep meat has low productivity level due to its poor genetics. Sixty percent of the livestock is represented by Criollo, 25 percent by mixed breed and 15 percent by other breeds.v In 2010 total production of sheep meat and wool were 34,000 tons (an increase of 1.2 percent from 2009) and 10,200 tons, (a decrease of 0.4 percent) respectively.viii Over 40 percent of the wool production is located in the region of Puno.
1.2 Market Drivers The agritech sector has demonstrated steady growth, averaging at 3.4 percent during the 10 year period 2000-2010. As the Peruvian government continues to stimulate the economy through Free trade agreements, agricultural export activities have demonstrated a strong growth rate of 20 percent during the last 5 years and are estimated to grow considerably to populous countries such as China, Korea Japan and India.ix Production as well as demand for meat has grown. Poultry production more than doubled since 1998 and chicken remains a major staple food in Peru. The Dairy market enjoyed growth especially in Cajamarca, located in north of Peru. A forestry development board, Fondo de Crédito para el Desarrollo Forestal (FONCREAGO) introduced programmes to improve production by decreasing the use of synthetic fertilisers, providing veterinary services and improving pasture management.x Production of agriculture products in thousand tonnes
4/
2008
2009
2010f
2011f
Pork Production
115.2
114.2
118
121.3
Beef & Veal Production
163.3
166.8
170.6
173.1
Milk Production
1,597.60
1,670.00
1,718.20
1,844.80
Exporter Guide | Peru | Agritech Market | November 2011
Poultry Production
877.20
937.60
975.00
1,020.20
Source: Business Monitor International (NB: 2010, 2011 forecasts)
1.3 Market Potentialxi The growth of the economy has increased consumer consumption, trade and quality of life. There are opportunities for high tech machinery, seeds for agriculture and products for livestock (such as hormones and vaccines). Agriculture is a sector that New Zealand is known for its expertise, with opportunities for New Zealand companies to provide consultancy services and training.
1.4 Key Players in the Market xii A key player in the dairy industry is Leche Gloria, the largest dairy products manufacturer. Gloria collects over a thousand metric tons of milk everyday and provides artificial insemination products, milking equipment, tanks, cold lines and pasteurizers. Gloria is based in Arequipa. Nestle is another prominent player in Peru which invested over US$12 million in factories and a plant in Lima and Cajamarca.
1.5 Regulatory Information provided in this section is for reference only. When negotiating supply contracts and before beginning actual export, companies are advised to consult closely with their importer or distributor. Duties and tariffsxiii Custom duties on imported goods are imposed on an ad-valorem basis at rates of 0 percent, 9 percent, 17 percent and 20 percent. The majority of agribusiness goods entering Peru arrive duty free, however the payment of Goods and services tax (IVA) on freight and insurance is still applied in most cases. IVA is applied to the CIF value of import goods, plus corresponding duties, at a rate of 18 percent. All goods imported into Peru must be cleared through Peruvian Customs and it is useful to consult the services of a customs broker or freight forwarder. The regulatory environment for agriculture sector has been eased in the last years: • Income tax was reduced to 15% • Early recovery of Value Added Tax in the pre-operational stage • Depreciation of water and irrigation expenditures at a rate of 20% annually. • Businesses located at 2,500 meters above sea level are tax exempted.
5/
Exporter Guide | Peru | Agritech Market | November 2011
These tax benefits apply until December 2021.xiv For more information see Centralized governmental online service to process international trade, www.vuce.gob.pe Licensing and registration requirements The products that require certification prior to import from the Peruvian Agrarian Health Service (Servicio Nacional de Sanidad Agraria or SENASA within the Ministry of Agriculture, www.senasa.gob.pe) include: • Plant products and any products that might present a danger to plants • Animals • Fertilizers and pesticides • Veterinary products and animal feed Products such as foods, beverages, toys, solid residuals, chemical goods require certification or registration prior to import from the General Direction of Environmental Health (www.digesa.minsa.gob.pe). The products that require certification prior to import from the General Direction of Drugs, Raw Materials (www.digemid.minsa.gob.pe) include pharmaceutical products, diet products, sweeteners and medical products. Imports to Peru of new agricultural machinery are not regulated and therefore does not require any special certification prior to shipment. However, imports of used agricultural machinery would need to comply with certain regulation.
1.6 Sustainabilityxv Since the foundation of the Ministry of the Environment (MINAM) in 2008, there has been a process of institutional strengthening regarding environmental issues in the Country. In Peru, the National Environmental Policy (NEP) is in accordance with the General Environmental Law. The NEP is a compulsory instrument which gives orientation to public and private activities. Its main areas are: biological diversity, forests, climate change, solid residues, sanitization, chemical substances and others. It highlights the preservation of the Amazon with Sustainable Development. Currently national, sectorial, regional and local authorities are promoting, by tax incentives, the development of investment projects with clean production technologies. Dairy farmers are projected to be affected by this regulation in the future, however currently there is not a high level of awareness.
6/
Exporter Guide | Peru | Agritech Market | November 2011
2 MARKET ENTRY AND DEVELOPMENT 2.1 Market Entry Strategies New Zealand pastoral farming products are not well known in the market. The promotion strategy of the New Zealand pastoral-farming model (to increase agricultural productivity by improving pasture, animal and farm management) should focus on stand-alone elements that can be applied to the way Peruvian farmers operate today. The key to good market presence is finding the right distributor who can sell and distribute your product into the relevant areas. Given that most distributors in Peru seek exclusivity, we recommend that you spend time searching for the right distributor for your company’s products. If you choose to go with an importer/agent who will sell onto rural distribution channels, check that the extra margin they charge does not result in an uncompetitive final customer price. An agreement for marketing and promotion costs must be clearly established with agent / importer. Be aware that rural supply chains do little to promote your product and that they will rely on you and / or your importer / agent to do this for them. Options for promoting your product include advertising and PR in rural media and farming magazines, promotion at field days, technical presentations and participation in exhibitions, personal sales calls and direct marketing. Peru’s pastoral based farmers do not trust on new products or new ideas, they need to see results. It is recommended to seek assistance from a reputable scientific company that conducts research, seminars on genetics and pasture farming in high altitudes. Relationship marketing should still be a central part of any entry strategy. Marketing support on technical and financial matters should be considered.
2.2 Points of Differentiation There are three New Zealand technologies that may have a unique and sustainable competitive position in Peru. •
7/
Forage Seeds: New Zealand seeds up to 2009 have good reputation in the market, they can be used for various purposes, yield high productivity, etc. However there are rumours about problems with National Agrarian Health Service within Ministry of Agriculture in Peru (SENASA), therefore imports have dropped recently.
Exporter Guide | Peru | Agritech Market | November 2011
•
Electric Fencing Equipment: According to distributors, New Zealand electric fence energizers are very reliable and adapt very well to the power requirements of the Peruvian conditions. The fences have a strong reputation as top market players.
•
Animal Genetics: New Zealand genetics are tailored to the pasture-based model and produce small animals with very efficient pasture to milk conversion rates. For producers that follow the New Zealand model or want to decrease the size of their cows, New Zealand genetics are very well positioned, although still market share is very small. The following table outlines areas of opportunity for New Zealand agritech business in the Peruvian market. Technology Area
Product Category
Product
Opportunities
Threats
Genetics
BOVINE SEMEN
Bovine semen
Strong support of leader’s opinion to the use of pasture based system
Payments for milk mainly based on production level (not in solids).
Increasing use of pasture based system in Puno.
Low price of national seeds and strong competition from the USA.
Irrigator (effluent spreaders)
High price of fertilizers. Current rules for effluent management.
Similar Australian technology. Infrastructure changes necessary to use irrigators.
Electric fence
Prestige of NZ technology. Market potential.
Lower cost of suppliers from domestic and other countries
–
Important Labs dominate the market. High cost and long inscription procedure. Competition from other trademarks.
FORAGE SEEDS
White clover Rye grass
Pasture Management EFFLUENT MANAGEMENT
ELECTRIC FENCE
Vaccines ANIMAL HEALTH PRODUCTS Hormones
Animal Management Systems
Milking Machinery
8/
CALF FEEDERS
Calf feeders
Market potential. Increasing use of pasture based system in Puno and Arequipa
EID
Readers, Ear-tags
Traceability requirements.
High cost.
WEIGH-SCALES
Weigh-scales
Good relation quality price
Competition from other brands.
MILK TANKS
Milk tanks
Good relation quality price
Competition from leaders in the
Exporter Guide | Peru | Agritech Market | November 2011
Technology Area
Product Category
Product
Opportunities
Threats market. Inexistence of post-sale technical support.
MILKING EQUIPMENT
Milking equipment
Good relation quality price
Competition from leaders in the market. Inexistence of post-sale technical support.
2.3 Long Term Strategic Issues for Exporters to Considerxvi The 2007-15 Strategic Plan to Develop Livestock in Lima promotes better technology to manage cattle and to improve genetics. New Zealand companies could play a key role in the implementation of the plan (i.e. electric fences, and light livestock equipment, etc).
2.4 Distribution Channels The most common channels used by New Zealand agritech companies that export to Peru are: a) directly to a Peruvian distributor / retail channel. b) through a New Zealand consolidator (i.e. Pacific Basin Exports Ltd; www.pbex.co.nz) There are a few companies in Peru that act as an importer / agent working as an intermediary between the manufacturer and the rural supply store. However, due to the small size and competitiveness of the market in Peru, the stores also tend to be the distributor / dealer for the country in most cases. Agricultural supply stores in Peru will handle a wide range of merchandise that is tailored to the productive sector in the city / region where the stores are located. Most companies request exclusive distribution rights from their suppliers when they bring in new technology from abroad and often prefer to deal directly with the manufacturer. If they do not get exclusivity distribution rights will request financial support to cover marketing start up expenses. Animal health products are usually imported by specialist veterinary companies (local manufacturers of veterinary products) and are sold into distribution / dealer channels. This is largely due to their specialist knowledge and experience with the regulatory approvals required and the support they can offer to the distribution channels with their teams of veterinary / sales support staff.
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Exporter Guide | Peru | Agritech Market | November 2011
Farming services such as research, consultancy and in-bound agricultural tours could be promoted through rural stores and there are some organisations which are interested in this concept. Appropriate industry associations, representative groups and government agencies could also be an outlet for these services.
3 MARKET RESOURCES AND CONTACTS ASSOCIATIONS ORGANISATION
WEBLINK
Ministry of Agriculture - Peruvian Agrarian Health Service
www.senasa.gob.pe/
Perulactea, a business network – dairy sector
www.perulactea.com/
Ministry of Health
www.digemid.minsa.gob.pe/
Promotion Commission Peru Export and Tourism
www.promperu.gob.pe/
Foreign Trade Society of Peru
www.comexperu.org.pe/
Peruvian Institute of Asparagus and Vegetables
www.ipeh.org/index.asp
TRADE EVENTS
WEBLINK
Expo Alimentaria, Lima
www.expoalimentariaperu.com
Livestock Fair of FONGAL Cajamarca
www.fongalcajamarca.com.pe/
Calendar of all the trade events within the sector
www.minag.gob.pe
OTHER NZTE PUBLICATIONS REPORT
WEBLINK
Peru Country Brief
www.nzte.govt.nz
Disclaimer: This publication is provided to you as a free service and is intended to flag to you market opportunities and possibilities. Use of and reliance on the information/products/technology/concepts discussed in this publication, and the suitability of these for your business is entirely at your own risk. You are advised to carry out your own independent assessment of this opportunity. The information in this publication is general; it was prepared by New Zealand Trade and Enterprise (NZTE) from publicly available and/or subscription database sources. NZTE; its officers, employees and agents accept no liability for any errors or omissions or any opinion/s expressed, and no responsibility is accepted with respect to the standing of any firm/s, company/ies or individual/s mentioned. New Zealand Trade and Enterprise is not responsible for any adverse consequences arising out of such use. You release New Zealand Trade and Enterprise from all claims arising from this
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publication. New Zealand Trade and Enterprise reserves the right to reuse any general market information contained in its reports.
i ii iii iv v vi vii viii ix x xi xii xiii xiv xv xvi
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Central Intelligence Agency retrieved from https://www.cia.gov/ New Zealand Ministry of Foreign Affairs & Trade (2010) retrieved from www.mfat.govt.nz Global Trade Atlas. November 2011 retrieved from http://www.gtis.com Business Monitor International, October 2011. Peru Agribusiness Report A4 2011. PWC, November 2011. Global Agribusiness Project: Background Analysis Mindpower Solutions, June 2011, Peru Milk and Dairy Products Market Outlook to 2015. Source: Agrobanco, www.agrobanco.com.pe Peru Ministry of Agriculture. 2010. Retrieved from www.minag.gob.pe COMEXPERU, July 2011. Market Analysis of Opportunities for New Zealand Business in Peru Business Monitor International, October 2011. Peru Agribusiness Report A4 2011. COMEXPERU, July 2011, Market Analysis of Opportunities for New Zealand Business in Peru Mindpower Solutions, June 2011, Peru Milk and Dairy Products Market Outlook to 2015. Ministry of Commerce VUCE 2010. Retrieved from www.vuce.gob.pe COMEXPERU, July 2011, Market Analysis of Opportunities for New Zealand Business in Peru PWC, 2010, Doing Deals in Peru Regional Directorate of Agriculture in Lima, published March 2007, Strategic Plan to Develop Livestock in Lima.
Exporter Guide | Peru | Agritech Market | November 2011
