Policies for the Future of Farming and Food in Peru

Executive Summary

Key messages

• Over the past two decades, much of Peru’s agriculture and food sector has undergone major transformations. Market-oriented reforms have spurred agricultural productivity growth, and an export-driven sector has emerged and is now thriving. This strong performance is concentrated in the Costa (coastal) region, where products such as blueberries, fresh grapes, asparagus and avocados have seen impressive yield increases and sustained productivity growth. At the same time, major challenges remain for small-scale agriculture, including limited access to input and output markets, low levels of technology and infrastructure, limited access to financial services, and low productivity.

• Peru’s agricultural policies are oriented towards continuing to promote export-oriented agriculture, while better integrating smallholder farmers into local, domestic and international markets. Multiple measures and investments have been undertaken in recent years to address persisting challenges for agriculture, and while progress has been made, further efforts are needed to fully achieve the desired outcomes.

• Despite the sector’s overall positive performance, persistent structural challenges related to land allocation and resource endowment remain. In particular, limited land titling (land property rights) and the need for substantial investments in public goods and general services continue to constrain the sector’s long-term sustainable development.

• Peru is a resource-rich country with considerable agricultural potential, yet significant regional differences and persistent land and water management challenges shape the sector’s development. Agricultural emissions represent a small share of overall emissions in Peru, and since 2000, the emission intensity of agriculture has improved significantly, while emissions rose by less than 20%, and agricultural output more than doubled. Moreover, the country’s nutrient inputs and surpluses, both phosphorus and nitrogen, remain comparatively low and are generally below the levels of regional peers and OECD averages for comparable metrics. At the same time, agriculture remains a key driver of deforestation. Estimates suggest that between 1985 and 2024, approximately 75% of agricultural systems linked to deforestation encompass a mix of crop cultivation and livestock production, underscoring the importance of sustainable management practices.

• Peru has made significant efforts at all levels of government to address the environmental challenges facing the agricultural sector. National, regional, and local authorities each play a role in shaping and implementing policies, strategies, and support services aimed at promoting more sustainable practices. This multi-level approach reflects a strong commitment to policymaking, even if co‑ordination and implementation remain ongoing challenges.

• A large number of actors are involved in agricultural innovation, but low public R&D investments, the fragmented approach and ineffective co-ordination among actors hinder progress, despite some gains realised in the past decades.

• Support for agriculture – measured by the Total Support Estimate – averaged USD 3 billion in 2022‑2024 (1.1% of GDP). The average level of producer support amounted to 6.2% of gross farm receipts, with market price support accounting for 82% of this amount and the remaining 18% being different types of budgetary transfers to farmers. Peru also provides consumer support through food aid programmes for the poorest populations. General services (GSSE) for the agricultural sector remain limited, accounting for 2.1% of the value of agricultural production, below the OECD average of 3.2%. General services primarily comprise irrigation development, followed by agricultural knowledge and innovation systems.

• OECD accession can assist Peru as it seeks to improve the implementation of effective policies for agriculture, to develop policies for stronger and more integrated food systems, and to improve productivity, sustainability and resilience across the sector.

Peru’s agricultural policies need to address both the promotion of export-oriented agriculture and, the challenges facing small-scale agriculture

Peru’s food and agricultural sector has experienced exceptional growth in export-oriented production over the past two decades, largely fuelled by trade openness and market-oriented reforms that have positioned the country as a leading global exporter of various high-value crops. This strong performance is concentrated in the Costa (coastal) region, where products such as blueberries, fresh grapes, asparagus and avocados have seen impressive yield increases and sustained productivity growth. The sector’s transformation has not only boosted output but has deepened its integration into global markets, with Peru being a net exporter of agro-food products, underscoring the sector’s strategic role in Peru’s international trade.

The structure of Peru’s agriculture reflects a mix of farm types: the majority, about 96% of farmers, are engaged in small-scale subsistence farming, particularly in the Selva (Amazon) and Sierra (Andes) regions. At the same time, a small group of larger farms (0.2%) controls more than half of the agricultural land. Most small-scale farms operate with low levels of technology and productivity, underdeveloped infrastructure and limited access to credit and other financial services. Furthermore, an urban-rural divide across many dimensions, including poverty, access to public services, infrastructure development, employment, income, and food security, affects farmers in these areas. The sector’s low level of land titling (26%) and lack of formality further exacerbate these issues. This is particularly the case for Indigenous Communities, which remain heavily engaged in agriculture, fisheries and mining.

Peru’s strategy aims to strengthen and expand export-oriented agriculture, while fostering the integration of smallholders into more sustainable and productive value chains. Achieving this, however, requires complementary investments in both social and environmental domains to ensure that growth is inclusive and environmentally sustainable. The National Agricultural Policy 2021-2030 primarily seeks to address the challenges faced by subsistence farmers. This includes raising incomes and improving livelihoods by increasing farm competitiveness and integrating small-scale farmers into markets. This needs to be accompanied by enhanced natural resource management for sustainable agricultural growth. However, policy frameworks and initiatives addressing these objectives remain small in scale, often due to limited resources, weak co‑ordination, fragmented programmes and lack of coherence across institutions. Overlapping mandates and limited accountability mechanisms contribute to challenges in governance across multiple agricultural policy domains.

Support to agriculture, as measured by the OECD, is relatively low. For 2022-24, the Producer Support Estimate (%PSE) stood at 6.2% of gross farm receipts, significantly below both the OECD average (13.2%) and the emerging economy average for positive PSE (12.2%).1 Most support (82%) was provided through market price support, with the remaining 18% taking the form of budgetary transfers, mainly for input subsidies and on-farm services (16%), with smaller shares for emergency support (1%) and environmental services (1%). The General Services Support Estimate (GSSE) amounted to 2.1% of the value of agricultural production, also below the OECD average of 3.2% for the same period. The total support to agriculture (TSE) averaged about USD 3 billion per year, representing 1.1% of Peru’s GDP, almost double the OECD average of 0.54%. TSE expressed as a percentage of GDP indicates the burden that the support to agriculture generates for the country’s economy.

Peru’s agriculture operates within one of the world’s most biodiverse countries, with the Amazon basin covering more than half of its territory and the country benefiting from abundant water resources. While agriculture provides vital livelihoods and economic opportunities, it is also a major driver of deforestation. Between 1985 and 2024, approximately 75% of agricultural systems linked to deforestation were classified as ‘mosaic’ agricultural land use, which encompasses a mix of crop cultivation and livestock production. While Peru represents only 0.4% of global GHG emissions, and agriculture accounts for only a small share of Peru’s total emissions – and its emission intensity has improved significantly since 2000, with output more than doubling while emissions rose by less than 20% – emissions from land use, land-use change, and forestry remain the country’s largest source of emissions.

Strengthening land tenure rights is essential to curbing deforestation, and addressing the agricultural sector’s role requires integrating this issue systematically into the policy framework and strategic objectives. Doing so is not only critical for environmental protection but also serves the sector’s long-term interests, as Peruvian agriculture is highly vulnerable to environmental pressures, including extreme weather events, soil degradation, and water stress. In the face of these pressures, improving the sector’s resilience through risk management, including modern irrigation systems and improved water and soil management, is key. Notably, Peru has taken action to mitigate environmental pressures by designating 22.5% of its land area as protected, higher than the OECD average of 16.9% and established a comprehensive monitoring system of land degradation and forest loss.

Since the early 1990s, Peru’s agricultural output has expanded significantly, especially in the coastal areas, supported by diversification into high-value export crops and greater use of variable inputs such as fertilisers, particularly in coastal regions. Productivity levels have experienced phases of rapid growth, although total factor productivity (TFP) gains have moderated over the past decade. Even so, Peru continues to outperform many of its regional peers as well as the OECD average.

The progress achieved in Peru’s coastal, export-oriented agriculture illustrates the potential of a strong knowledge and innovation system (AKIS), but extending these gains more widely across the sector remains a challenge. Whilst the coastal region’s export-oriented agriculture displays impressive technological advances, these have not expanded to the rest of the country. Only 3.8% of farmers receive agricultural extension services, and there is an insufficient integration of skilled labour in the sector. Innovation remains fragmented and insufficiently resourced, with low public investment. Weak institutional co‑ordination further hinders the development of the AKIS.

Peru faces wider challenges in food systems. The limited value chain development in the Sierra and Selva regions imposes structural barriers for farmers to integrate into domestic and international markets and contributes to both food loss and waste and food insecurity. The improvement of small-scale farmers’ position in the value chain is limited by a low participation (7.5%) in co-operatives, producer organisations and other associative forms. Moreover, around 40% of Peru’s population suffers from food insecurity. The government’s targeted food assistance programmes to date have yielded only moderate results due to limited resources and inadequate monitoring systems. Meanwhile, urban areas are experiencing rising obesity levels.

Peru’s international policy engagement is strong. While not yet an adherent to the Recommendation of the Council on the OECD-FAO Guidance for Responsible Agricultural Supply Chains, Peru adheres to the Council Recommendation on the OECD Due Diligence Guidelines for Responsible Business Conduct (RBC) and is an adherent to the Decision of the Council on the Guidelines for Multinational Enterprises on Responsible Business Conduct. Through its National Plan on Human Rights 2018-2021, the government has committed to developing a National Action Plan on Business and Human Rights (NAP) to promote business respect for human rights. Moreover, Peru has adhered to the 2022 Agricultural Ministerial Declaration “Declaration on Transformative Solutions for Sustainable Agriculture and Food Systems”.

Enhancing resources and monitoring can help increase the effectiveness of agricultural policy efforts

While Peru’s agricultural policy framework sets important objectives aimed at addressing longstanding challenges, there is still considerable scope to scale up and strengthen implementation. Additionally, given the strong performance of the export sector, recommended areas for priority action largely fall outside that domain. Key actions to better target policy efforts are set out below.

Prioritise agricultural policy efforts as part of long-term structural reforms. Expand public investment in general services and strengthen the financial capacity of key institutions. Ensure that adequate resources are allocated to those institutions that create the enabling environment for sustainable agricultural development. This includes prioritising strategic investments in services that will help develop the sector, such as developing a national extension service system, advancing land titling (land property rights) initiatives, enhancing innovation capacity by investing in the AKIS system particularly in the development of extension services, improving plant and animal health protection and control services, and upgrading transport infrastructure, irrigation systems, and market information systems. There is a strong basis to work from: currently, Peru’s support for agriculture remains relatively low, with a PSE of only 6.2% and half of the budgetary transfers to agriculture are directed toward the most impactful investments, such as general services. That said, despite these positive overall settings, the outlays for general services are relatively small in light of the pressing challenges faced by the sector. Policy efforts should therefore continue to focus on building a strong and comprehensive enabling environment for the sector.

Strengthen the administrative capacity and co‑ordination of agricultural policy design and implementation by reforming and reinforcing the institutional framework, ensuring that programmes, projects, and plans include concrete implementation strategies. The recurring challenges of limited execution and accountability by equipping existing institutions with the resources needed for effective co‑ordination and by harmonising national plans with subnational strategies. Establish a flexible structure that links national, regional, and local government levels, with aligned budget planning and execution timelines, while building the capacity and reach of local governments. Increase planning horizons for human and financial resources to ensure programmes can be implemented beyond political cycles. Strengthen policy evaluation and monitoring by working to improve the collection of agri-food data over time, for example, by carrying out a new agricultural census, as the last one dates from 2012.

Adopt an integrated policy approach to boost productivity, sustainability, and resilience in the agro-food sector by better integrating farmers into value chains and investing in essential infrastructure. Prioritise road networks, cold chains, and storage and transport systems to connect farmers in the Sierra and Selva regions to markets. Promote regionalised food supply chains by decentralising the food system, strengthening urban and rural linkages, and improving local food resilience. Foster collaboration among government, communities, and farmers, and encourage the formation of farmer organisations or co‑operatives. Evaluate past initiatives to improve association participation and use tools like the national farmers registry and awareness campaigns to increase engagement and formalisation.

Take measures to protect and preserve Peru’s unique environment by strengthening governance, policies, and investments to curb agriculture-driven deforestation and promote a diversified, climate-resilient agricultural sector. Secure and streamline forest land property rights, implement improved monitoring and enforcement against illegal logging, and coca production, and improve data collection on deforestation, soil degradation, water quality, and emissions to guide policy. Expand and rehabilitate off-farm climate-smart irrigation systems, strengthen water management oversight, and incentivise ecosystem services to reduce pressure on natural resources. Prioritise productivity growth, efficient input use, and comprehensive climate adaptation and mitigation strategies, including risk management tools to help farmers respond to droughts, floods, and other climate-related threats.

Build a strong agricultural innovation system and extension services by increasing public investment in research, development, and innovation (R&D&I) and establishing a clear budgetary plan for sustained funding. Strengthen the National Institute of Agricultural Innovation (INIA), improve co‑ordination with regional institutions, and extend successful initiatives like the National Agricultural Innovation Programme (PNIA). Foster multi-level governance that connects public, private, academic, and regional actors, while investing in farmer training, skills development, and modernised extension services tailored to small-scale farmers. Address the sector’s shortage of qualified labour through targeted education and capacity-building strategies.

Strengthen food system policies by systematically addressing food security, expanding and aligning resources for assistance programmes, and building local government capacity. Promote healthier diets through a multi-ministerial strategy combining regulation, incentives, and education, and explore demand-side measures for sustainable food choices. Adopt a national plan to cut food waste with clear targets, monitoring systems, and support for local initiatives. Improve food safety, especially in informal markets, by enhancing institutional co‑ordination, investing in hygiene education, surveillance systems, and accredited laboratories to better detect and control hazards.

Summary of recommendations

 

Area	Assessment	Recommendation
Prioritise agricultural policy efforts toward long-term structural reform	The dual structure of the farming sector sees a buoyant export-oriented agriculture on the one hand and a large number of small-scale subsistence farms on the other. Most farmers are small-scale (96%) and largely practice subsistence farming. The majority of small farms have low technology adoption, limited access to credit and financial services and no land titling or land rights. The low level of land titling in the agricultural sector, especially for Indigenous Communities, complicates development and integration efforts.	Ensure sufficient financial resources for institutions that create the enabling environment for the sustainable development of agriculture Allocate financial resources amongst key institutions Simplify and accelerate the registration and allocation of land titling (land property rights) Establish a comprehensive strategy to foster the formalisation of agriculture. Expand microcredit and insurance schemes and finance facilities tailored towards smallholders.
Strengthen administrative capacity and co-ordination of policy design and implementation for the agricultural sector	While half of the outlays in agricultural support go to general services, these allocations are relatively small relatively to the challenges faced by the sector. Governance challenges are a recurring issue for the agricultural sector. Policies are rarely implemented effectively with measurable outcomes. Fragmented co‑ordination, overlapping mandates and limited accountability mechanisms contribute to governance challenges.	Harmonise national plans with subnational strategies. Ensure programmes, projects, and plans have concrete implementation strategies. Enhance inter-ministerial co-ordination for agri-food policies. Strengthen the capacity and reach of local governments. Improve data collection of agri-food indicators. Establish a coherent system of monitoring Peru’s agricultural policies.
Adopt an integrated policy approach to stimulate productivity, sustainability and resilience in the agro-food sector	Agricultural productivity gains are driven by export-oriented farms cultivating high-value crops. The majority of small-scale farmers experience persistently low productivity levels due to limited technologies, infrastructure, key inputs and credit. Peru’s on-farm GHG emissions intensity is comparatively low.	Target investment for developing value chain infrastructure. Develop local, regional, and national food supply chains. Encourage farmer organisations or associations.
Conserve, restore, and sustainably use Peru’s unique environment	Peru has abundant and unique natural resources, with the Amazon basin covering more than half of its territory. The agricultural sector is responsible for the majority of Peru’s forest loss, with deforestation being the primary contributor to GHG emissions. Agriculture is facing increasing vulnerabilities from the impacts of environmental challenges, notably the increase in extreme weather events, soil desertification and water stress. There is scope to improve water management and investments in view of water stress constraints. The coverage of modern irrigation systems is low. Effective monitoring of environmental impacts requires more and better data.	Conserve Peru’s rich biodiversity, forest cover, and water resources to promote a diversified and environmentally sustainable and resilient agricultural sector. Strengthen forest land property rights. Implement stronger policies and incentives to curb agriculture-driven deforestation in the Amazon. Improve co‑ordination within MIDAGRI by clarifying mandates. Implement strict monitoring and enforcement systems. Improve information and assessment of agri-environmental impacts. Expand coverage of off-farm climate-smart irrigation systems. Strengthen regulatory oversight of water management. Expand economic incentives for ecosystem services schemes. Focus on productivity growth and improved input use efficiency. Prioritise climate adaptation in an inclusive strategy. Expand and facilitate the adoption of risk management tools.
Invest in a strong and effective agricultural innovation system	Innovation is concentrated in Costa’s export-oriented agriculture, which benefits from technological advances. The lack of investment in R&D&I is reflected in Peru’s low innovation performance, notably in the Selva and Sierra regions. Peru’s AKIS operates within a fragmented institutional landscape, marked by limited co‑ordination among public, private, academic, and regional actors. This hinders Peru’s AKSI from meeting system demands. Agricultural extension services have low coverage would benefit from significant expansion and improvement.	Establish a budgetary plan for allocating government funds to R&D&I in the agricultural sector. Strengthen Peru’s public agricultural research system by increasing financial allocations. Extend successful initiatives. Strengthen Peru’s AKIS by establishing effective, multi-level governance mechanisms that foster co‑ordination. Use all policy levers to strengthen agricultural extension services. Invest in education and skills strategies for the agricultural sector.
Improve the design and implementation of food system policies	Value chain development sees significant regional disparities, where farmers in the Sierra and Selva regions face structural barriers to market integration. Peru has high levels of food insecurity, and the trend is increasing, especially in rural areas. Urban areas see a rising issue of obesity, with a lower but increasing trend in rural areas. Efforts on dietary habits have been put in place. Efforts to measure and address food loss and waste are at an early stage of development.	Expand resources for food assistance programmes. Create a comprehensive strategy to encourage healthier food choices. Adopt a comprehensive national plan to combat food waste. Strengthen food safety in Peru.

Note

← 1.  Three countries included in the Monitoring and Evaluation, Argentina, India, and Viet Nam, have negative levels of support to the sector; when these are factored in, the average PSE stands at 6.8%.