Introduction:China and Peru have completed negotiations to upgrade their free trade agreement, bringing new opportunities for Peruvian coffee exports. In the first quarter of 2024, Peruvian coffee exports surged by 69%, and the Chancay Port is expected to open in November, which will shorten shipping times to Asia. However, climate change remains a concern, as the La Niña phenomenon may lead to low temperatures impacting the harvest season from May to September. This article analyzes the business opportunities and risks, and provides key information on Peruvian coffee-growing regions and climate.
China and Peru recently signed a memorandum of understanding, marking the substantial completion of the FTA upgrade negotiations between the two countries. This progress will not only deepen bilateral trade and investment cooperation but also open up broader international markets for Peru’s coffee industry. With China’s growing coffee consumption demand, Peruvian coffee exports are presented with significant growth opportunities.
In the first quarter of 2024, Peruvian coffee exports achieved an astonishing year-on-year growth rate of69%, indicating a gradual increase in its international market competitiveness. During her visit to China, Peruvian President Dina Boluarte specifically held an “Invest in Peru” event in Shanghai, actively promoting investment opportunities to Chinese enterprises, hoping to enhance national productivity and global supply chain status through foreign investment.
Chancay Port will become a key logistics hub. This port, built with the participation of Chinese enterprises, is expected to officially open in November 2024 and will handle25%of Peruvian agricultural product exports. A variety of goods, including coffee, are expected to see reduced transportation costs as a result. The port will not only serve Peru but also benefit neighboring countries such as Brazil, shortening Asian shipping routes by12 daysand significantly improving export efficiency.
Despite the promising business opportunities, Peru’s coffee industry is facing severe challenges from climate change. In the 2023/24 season, the El Niño phenomenon caused high temperatures and insufficient rainfall, coupled with coffee leaf rust outbreaks, which temporarily affected production. Fortunately, the situation has recently improved, and the 2024/25 season is expected to recover to4.22 million bags(each bag weighing 69 kilograms) in production levels.
However, new climate threats are approaching. Peru’s National Meteorology and Hydrology Service predicts that starting in July, as winter arrives, the coastal areas will experience abnormally low temperatures, especially in the main coffee-growing regions at elevations of1,000 to 1,800 meters, which are mostly concentrated in the coastal areas of the Andes Mountains and are most vulnerable to low temperatures. More worryingly,the La Niña phenomenon may return in the second half of the year, leading to further temperature drops that could persist until September—this period coincides with Peru’s main coffee harvest season.
Low temperatures will directly interfere with the ripening and harvesting of coffee cherries, delaying the overall harvest season and posing additional challenges to Peru’s mountain farms, which already face rugged terrain and poor transportation. Coffee farmers may need to invest more resources to cope with harsh weather while ensuring the quality of their harvests is not compromised.
Overall, Peru’s coffee industry is at a critical juncture of facing“a dual test of business opportunities and climate”. The upgrade of the China-Peru FTA and the opening of Chancay Port create unprecedented convenience for exports, but whether this opportunity can be seized depends on the climate conditions in the second half of the year and the industry’s adaptability.
The above content is compiled by CoffeeHunters, a coffee news website.
