15 May 2018

Asparagus production and water security in Peru

Darian writes:*

The blood of traditional small/medium scale farmers is on the hands of big agribusiness managers in Ica. Peru’s non-traditional agricultural sector and its export boom - with focus on asparagus - after its neoliberal reform, is a relevant topic under the framework of growth and development. Whilst the asparagus industry is a key contributor to Peru’s economic continuous growth, it comes at the social cost of water shortage in Ica where the irrigation systems dry out the groundwater. As the Peruvian government fails to adjust for the negative externality, marginalised traditional rural farmers carry the social costs as they are deprived of their water supply.

The foundation of Peru’s agricultural export boom was set in 1990 when freshly elected authoritarian rightwing President Alberto Fujimori began his structural neoliberal reforms. These reforms included the removal of land ownership restrictions, cheap land prices and tax incentives, which encouraged big businesses to expand their agricultural production, as well as Foreign Direct Investment (FDI). In addition, in 1991 Peru agreed to the US’s ‘Andean Trade Promotion and Drug Eradication Act (ATPDEA)’ [pdf], which opened the US market for Peruvian agriculture by lowering trade barriers. As the name suggests, the act was a strategic move in war on drugs as the US attempted to restrict growing coca leaves and other drug based agriculture by increasing the opportunity cost. As such policies favoured big enterprises [pdf]. As a result, due to high global demand and favourable climate conditions, Peru developed into the global leading exporter of fresh asparagus and the second highest exporter of preserved asparagus [pdf]. In terms of economic growth, the neoliberal reforms was successful as Peru experienced steady GDP growth since 1990. As Hepworth at el found "GDP grew by 9.2 per cent in 2008, the 11th highest rate globally, and foreign exchange reserves are at record levels” [pdf].

Given the profitable asparagus market, two primary areas where cultivated to grow the precious cash crop. Firstly, in the north in the La Libertad district - which benefited from the Region Chavimochic irrigation project as it gains its water supply from rivers in the Andes. Secondly, in the south in Ica - whose irrigation system relies mainly on limited ground water. Cultivating asparagus is more water intensive than traditional farming techniques and crops such as grapes [pdf]. Hence, once the asparagus boom started, agro-exporters drilled new wells and bought existing wells from cooperatives with government permission [pdf]. In essence, big enterprises aimed to monopolise access to fresh water. Consequently, both regions experience water shortage - where Ica is more worrying. The fragile desert coast of Ica had to be transferred into verdant farmland which did not only cost millions of dollars, but also depleted scarce ground water.

In terms of government actions, at this point it is too late to restrict the supply of groundwater - “there is little control over who pumps water, the aquifer could dry up before the government comes up with a plan to pipe in rainwater from the Andes or the Amazon as it has done in northern Peru." The ground water in Ica is said to run dry in approximately 10 years. This has major environmental as well as social implications. Environmentally speaking, given that Ica is located at the coast to the Pacific Ocean, the danger is that once the sweet ground water runs out, the salty ocean water will fill the aquifer which ‘will spoil the farm land and disrupt the ecosystem.’

Socially speaking, many rural traditional farmers, are pushed out of business as they can no longer water their fields. Big enterprises have not only used up most of the water, leaving little for traditional small scale farming, they also restricted the access to water. The ground water is scares making irrigation very costly. This either increases unemployment or causes farmers to be dependent on employment by the asparagus producers - which drives the water shortage further. Fresh water - a basic human need - is treated like an excludible good. As Emily Schmall states: “when a World Bank employee went in April to investigate complaints that loans made by its private sector arm had hastened the drying up of the Ica aquifer, he was shot at by gunmen after he spotted land pockmarked by clandestine wells."

Bottom line: Neoliberal policies allowed big businesses to exclude people from water access. Moreover, its wells dry out a desert district in an attempt to grow the economy. This has caused for alarming environmental risks as well as a social crisis. Traditional farmers are pushed out of business as they are excluded from the elementary right of water. Hence, the blood of traditional small/medium scale farmers is on the hands of big agribusiness managers in Ica. However, they will not be able to wash the blood off their hands as there's no water left.

* Please help my growth and development economics students by commenting on unclear analysis, other perspectives, data sources, etc. (Or you can just say something nice :)

1 comment:

Rory O'Sullivan said...

Your post is very well written, and I find it interesting. Particularly highlighting the social costs of this big agri-business. Dealing with this problem will consequentially be very difficult, especially I think because to many organisations looking in they see a booming exporting agricultural sector as a good thing. Furthermore, they could argue the social costs are mitigated by the increased employment opportunities. However, perhaps the situation will be resolved by the possible environmental issues. I know it's not ideal, but when the aquifers begin to get ruined by salt water, big-business will either move on to a different country, or be incentivised to fix their mess.

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