Trade Talk

March 24, 2022

Trade Talk with Jorge Fernandez Gil: EU regulations are affecting Peruvian exports but domestic demand is ever-increasing

Luke Wilkinson


At a glance

Peru’s thriving and diverse pulse trade is a reflection of its strong agricultural roots. More than a quarter of the population of the country works in an agricultural industry with pulses central to its success. Jorge Fernandez Gil, general manager of Agro Fergi, spoke with Luke Wilkinson to offer an outline of Peru’s most popular exports and how new markets and more improved production will bolster business in 2022.

Could you tell us when Agro Fergi began and what your role is within the company?

My father, my sister and I founded Agro Fergi together in 2013 as a 100% family company. My father is an expert in Peruvian dry beans and has more than 38 years experience working in exports whereas I specialize in Andean pulses, retail and market diversification and have 18 years experience in exports.
As a company, we focus a lot on fostering long-term relationships with our clients and providing a high quality product that can keep up with the demands of the international markets, especially with regards to regulations and particularly in Europe and the United States, where things have changed a great deal. We also offer our clients the chance to deal directly with us in Peru, a service of which we are very proud as, previously, countries such as Qatar or Saudi Arabia would have had to buy their pulses through a middle man. Now, we give them the opportunity to buy high-quality pulses directly from the source.

Peru is certainly a country with a growing reputation in the agricultural industry, what are some of its geographical advantages?

It’s well known that we have lots of very fertile areas in Peru. There are some places that used to be effectively deserts where nowadays you can see kilometers and kilometers of fields growing asparagus, mangoes, beans and tomatoes. International companies come here to invest in agriculture because the ground is so fertile. A part of our economy is also textiles and hospitality: people can't wait to come to Peru for the food. People used to say they came to see Machu Picchu, but now they come to eat!
Regarding the geographical advantages of Peru, firstly we have our proximity to the Pacific ocean. Along our coast we have two main ports: the port of Paita up to the north, and the port of Callao, which is where we have the greater volume of our exports. There are some other, smaller ports such as Salaverry port in Trujillo and Matará port in Arequipa, but they tend to be used by mining companies rather than for agricultural exports. 
Geographically we are generally very well situated, and we have a lot of shipping companies here that send cargo towards the ports of Central and North America, as well as shipping to Chile and vice versa. Also, the highways in Peru have improved a lot recently, so it’s become simpler to transport products from the production zones to the processing plants that are mostly found in Lima or the north of the country depending on the product. 
These days (in no small part due to the high prices of maritime freight) more companies are using terrestrial transport to export their products via the highways to countries around South America; the Inter-ocean highway in the south of Peru connects us with Bolivia and Brazil, the coastal Highway connects us with Chile and Argentina, and the Pan-American Highway connects us with Ecuador and Colombia. 

Which pulses do you deal with and where do they go when they leave Agro Fergi?

Our company is solely involved in exports and we deal with a variety of beans: black eyed, val and yellow, as well as three different sizes of lima beans: jumbo, baby and a medium size that's very popular in America. We also export some soy and some lupin beans, which are popular among some parts of the Peruvian population. We are also one of the biggest exporters of Peruvian broad beans.
The Gulfood exhibitions opened a lot of doors for us, allowing us to move into the middle-eastern market, one which already has very high levels of broad bean consumption. The difference between broad beans here and those from Syria, Egypt or Australia is the size: Peruvian broad beans are much bigger than anything they’re used to over there.
Previously, black beans were very popular in Europe but the new EU regulations have made exports more difficult. The UK is one of the main importers of black eyed peas from Peru but we are competing with Madagascar, Myanmar, Belize and Brazil in terms of prices. Val beans and pigeon peas go more to the African and central American markets: Panama, Jamaica, Cape Verde and the Dominican Republic. Yellow beans and soy tend to go to Europe, particularly France and Croatia. Elsewhere, we’re starting to see an increase in both jumbo lima beans and white beans in North America and Canada.
We put a lot of effort into diversifying our markets and, if you include the quinoa and oregano that we also deal with, we export to almost 50 countries around the world.

Which regions have the highest levels of pulse production in Peru?

Peru has the advantage of having over 30 different microclimates and, as I mentioned, some very fertile land yet our pulse production volumes are relatively small. This is because the biggest production area is along the northern coast of Peru, specifically the Lambayeque and Piura regions. These areas are very dry and the volume of production depends hugely on rainfall in January, February and March. Another big issue is that these areas produce lots of rice, which requires large quantities of water so pulses have to compete for land and water.
When it comes to annual production numbers, I can say for sure we will produce, say, 8,000 tons of quinoa, and 7,000 tons of oregano but this is not the case for pulses, which vary from year to year. There are some years, as was the case with ‘El Nino’ a few years ago, in which rainfall is high and pulse yields are huge, which deflates the prices. Other years, there is less rain and smaller production numbers, meaning prices remain high.
There are usually two harvests. With black eyed peas, for example, May is the biggest harvest of the year: in 2021, around 4,000 tons were seeded and the second harvest was just over 1,000 tons. The second harvests are always quite a bit smaller.

Exports of pulses grew by around 70% between 2019 and 2020. Why was that? Does the coming year look as promising?

Many new buyers entered into the market to import from us: South Korea began to import a lot of beans, mung beans in particular. I think the trade deal we have with South Korea has been extremely beneficial because not only do they import mung beans but also a lot of black eyed peas and other pulses.
During that period, the American harvests of black eyed peas and baby lima beans were a lot lower than normal so they felt they needed to top up from Peru. The amount that they imported certainly added to the increase you mentioned. This year I think we might take a serious hit from Europe as many traders who used to buy a lot of pulses from Peru may start buying from Myanmar and Madagascar, who have started to seed the same pulses that you find here, particularly lima beans and black eyed peas. There is a price difference of $300-$500 per ton compared with Peruvian beans and so European companies have already begun to buy their beans from these countries.
I also understood from some clients that there were problems with infestations and pesticides after the European Union changed their regulations. Some people did begin to import from Peru but unfortunately we still didn't have the problem of pesticides under control because the European Union rules were so new. As a result, clients began to ask for guarantees against pesticides that are difficult to meet right now. We can manage with other products but, in order to satisfy demand, we have to bring together around 10 different chains of farmers and, if one of them doesn't take sufficient care with their use of pesticides, then we have a cross contamination problem.
The government has already started working on this because this delay has meant that pulse exports aren't growing as they were so, if we want to regulate our pesticide use further, we need to educate farmers and make sure that the upcoming harvests meet these new regulations.

What are some of the factors that influence the consumption of pulses in Peru? Have growing levels of veganism had an effect? What about the influx of Venezuelan migrants?

Peru is a pulse-loving country: you very rarely see a Peruvian dish without beans. We're also a country that has a few superstitions, one of which is that if you begin the week with a plate of beans or lentils, the rest of the week will be a success. We've always eaten a lot of pulses but now we’re eating even more due to the new trend towards vegan and vegetarian food.
Traditionally, we eat a great deal of yellow beans but there’s definitely been an increase in demand for black beans in accordance with the increasing Venezuelan population. Their love of black beans hasn't quite integrated into Peruvian food yet but the rise in imported black beans needed to cover the Venezuelan demand could be maybe 2 or 3%. The Andean lupin bean is also gaining in popularity. 

Yes, the lupin seems to have really grown in popularity over there, why is that?

Partly because some studies are coming out that show lupin beans have very high levels of protein. It’s mainly gaining popularity in the northern, more mountainous regions, where they’ve even started making lupin ceviche when they don’t have fish - it’s delicious!

Finally, what are some of Agro Fergi's goals for the coming years?

We are looking to continue diversifying our markets; we think there's opportunity for expansion and we want to continue raising awareness about Peru’s huge production of high-quality pulses. We also want to keep working with the export associations and the government to push the domestic production system forward and be able to meet the new requirements of the international markets. But the most important thing is maintaining good long-term relationships with our clients. As a family business, we believe that this is at the heart of any successful organization.