IDB loan for $25 million will increase productivity and exports 

Peru will boost the competitiveness of its small and medium-scale farmers to increase productivity and exports with the help of a $25 million loan from the Inter-American Development Bank (IDB). 

Over the next four years, the program will directly benefit about 14,000 producers participating in the Program of Compensation for Competitiveness, of which an estimated 42 percent are women. The program aims to raise farmers’ productivity by 10 percent and increase the value of their products in domestic and foreign markets by 20 percent by the end of 2014. 

The project will make use of approaches such as the development of clusters and agricultural value chains that promote competitiveness of agricultural products. 

The program will also upgrade the National Agricultural Innovation System (SNIA, after its Spanish initials), including approval of a proposal for public investment to strengthen and consolidate SNIA in areas where the public and private sector are working to foster agricultural innovations, development of human resources, and modern infrastructure, among others. 

The program will also help strengthen the Agricultural Statistics Information System (SIEA, after its Spanish initials), including the dissemination of statistics through the SIEA website and other communications media accessible to farmers, associations, and decision makers. 

Peru’s agricultural sector accounts for a third of the nation’s total employment, about 8 percent of its gross domestic product (GDP), and 9 percent of total exports. The country’s annual GDP growth rate for the agricultural sector has exceeded 4 percent in recent years, and agricultural exports have increased from $642.9 million in 2000 to $3,164.6 million in 2010, according to figures from the National Agency for Tax Administration and the Ministry of Agriculture. 

The IDB loan is for a term of 20 years with a grace period of five years and an interest rate based on LIBOR. The program will be carried out by the Ministry of Economy and Finance. 

The loan is the second in a series of three operations to Peru to support policy reforms through a programmatic approach. The first disbursement of the initial loan in the series, which was made on July 7, 2009, for $20 million, initiated policy reforms promoted by the government.